Gladstone Investment : Investor Presentation as of September 30, 2021

GLADSTONE INVESTMENT

Quarterly Overview

September 30, 2021

Legal Disclaimer

This presentation may include forward‐looking statements. These forward‐looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward‐looking statements. Such factors include, but are not limited to: (1) changes in the economy and the capital markets; (2) risks associated with negotiation and consummation of pending and future transactions; (3) the loss of one or more of our executive officers, in particular David Gladstone, David Dullum, or Terry Lee Brubaker; (4) changes in our investment objectives and strategy; (5) availability, terms (including the possibility of interest rate volatility) and deployment of capital; (6) changes in our industry, interest rates, exchange rates, regulation, or the general economy; (7) our business prospects and the prospects of our portfolio companies; (8) the degree and nature of our competition; (9) changes in governmental regulation, tax rates and similar matters; (10) our ability to exit investments in a timely manner; (11) our ability to maintain our qualification as a regulated investment company and as a business development company; (12) the impact of COVID‐19 generally and on the economy, the capital markets and our portfolio companies, including the measures taken by governmental authorities to address it; and (13) those factors listed under the caption "Risk Factors" in our Form 10‐K, Form 10‐Q, registration statements and related prospectus supplements, and other documents we may file with the Securities and Exchange Commission ("SEC") from time to time. Additionally, many of the risks, uncertainties and other factors listed above, among others, are currently elevated by and may or will continue to be elevated by the COVID‐19 pandemic.

We caution readers not to place undue reliance on any such forward‐looking statements. Actual results could differ materially from those anticipated in our forward‐looking statements and future results could differ materially from historical performance. We have based forward‐looking statements on information available to us on the date of this presentation. Except as required by the federal securities laws, we undertake no obligation to publicly update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise, after the date of this presentation. Although we undertake no obligation to revise or update any forward‐looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including subsequent annual reports on Form 10‐K, quarterly reports on Form 10‐Q and current reports on Form 8‐K.

Past or Present Performance Disclaimer: This presentation includes information regarding our past or present performance. Please note, past or present performance is not a guarantee of future performance or future results. We undertake no obligation to update the information contained herein to reflect subsequently occurring events or circumstances, except as required by applicable securities laws and regulations.

Gladstone Investment | Overview(1)

BDC differentiated through buyout investment strategy

Publicly traded business development company

Buyout structure provides upside potential with strong downside protection

Dedicated lower middle market focus

• Nasdaq symbol "GAIN" | market cap of $461 million
• 2026 Notes listed on Nasdaq under the symbol "GAINN," with an interest rate of 5.00%
• 2028 Notes listed on Nasdaq under the symbol "GAINZ," with an interest rate of 4.875%
• $1.4+ billion invested since 2005 IPO
• Primary equity investor - Lead majority of prospective transactions, often partnering with existing management teams
• Differentiated approach ‐ Turnkey provider of equity & secured debt to effect change of control buyouts
• • Target mix of total invested dollars per transaction is 25% equity & 75% debt (at cost)
  • Traditional BDCs typically have equity exposure of 5 ‐ 10%
• Monthly distributions from interest on debt investments and other investment income
• Supplemental distributions to shareholders from capital gains on investment exits
• Target lower middle market companies (EBITDA of $3 ‐ $20 million) domiciled in the United States
• Focused on businesses that are cash‐flow positive (no early stage) and have strong management teams
• Industry agnostic with investments in manufacturing, business services/distribution, and consumer products

Diversified portfolio across industry and geography

Experienced management team with proven track record

• Current portfolio is diversified across 27 companies, 19 states, and 14 industries
• $746 million in total assets at fair value
• Externally managed by an SEC‐registered investment adviser, Gladstone Management Corporation, and administrator with over 65 professionals, collectively
• Seven investment professionals dedicated exclusively to Gladstone Investment Corporation
• Proven investment track record across multiple economic cycles

(1) All information in this presentation as of 9/30/2021, except as noted.

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Investment Highlights

Leveraged buyout investor with history of increasing distributions and realizing capital gains

Focus on Risk Management & Equity Value Creation

• GAIN strives for prudent purchase multiples in companies with strong growth prospects. GAIN's investment discipline and risk management approach yield attractive risk‐adjusted returns.

Strong and Growing Distributions

• GAIN has consistently raised regular monthly distributions to shareholders, having never missed a monthly distribution since its IPO in 2005. The regular, monthly distribution was increased to a $0.90/share annual run‐rate in October 2021.

Outperformance Compared to Industry Peers(1)

• GAIN has outperformed industry peers in return of equity ("ROE") and total return over the past three years. GAIN's three‐year average ROE is 11% vs. industry peers of 9% and GAIN's three‐year total return is 61% vs. industry peers of (1)%.

4	Significant Equity Positions Drive Upside Potential and Supplemental Distributions
GAIN is a proactive board participant and driver of value creation within the portfolio. Significant
equity ownership provides basis for managing downside risk and making supplemental distributions
	from capital gains. Average buyout exit cash‐on‐cash equity return of 4.3x.

5	Actively Investing in New Buyout Opportunities
GAIN continues to add to its portfolio and made two new buyout investments in FY 2022 to date, deploying
	approximately $34 million in capital.(2)

(1) See slide 11 for details.

(2) Excludes line of credit fundings.

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Investment Focus and Process

Investment

Focus

Investment Structures

Deal

Sourcing

Due

Diligence

• Target stable lower middle market companies with EBITDA of $3 ‐ 20 million
• Investment size (debt & equity) up to $40 million (typically 25% equity & 75% debt)
• Lead or co‐lead prospective transactions
• Focused on cash‐flow positive businesses with proven competitive advantages and strong management teams
• Sector agnostic with interest in manufacturing, business services/distribution, and consumer products
• Preferred equity is typically participating with a stated dividend of around 8%
• Secured 1st or 2nd lien term debt with current interest rates in the low‐ to mid‐teens, generally with a success fee due upon a change of control. 5‐year term without amortization
• Revolver may be provided with the expectation of refinancing shortly after close
• Portfolio company management option pool range of 10 - 25%
• Source opportunities from regional investment banks, M&A advisory firms, and industry executives
• Regionally focused sourcing strategy, spearheaded by every member of the investment team
• Debt & equity from single investor provides competitive advantage by improving the certainty of close and decreasing deal complexity
• Typical due diligence period of 45 to 60 days after executing letter of intent
• Thorough multi‐disciplinary approach - blending internal industry experience, onsite visits and management assessments, supplemented with third party quality of earnings reports, industry studies, management assessments, and customary legal and insurance investigations

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