Investment Income
Investment income for the nine months ended September 30, 2021 and 2020 was $53,778,440 and $40,837,634, respectively, and includes non-recurring income of $6,972,631 and $3,143,988, respectively. The increase in investment income for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily due to interest income and driven by our deployment of capital, increased invested balance, prepayments, and end-of-term payments, partially offset by falling market interest rates.
Operating Expenses
Operating expenses for the nine months ended September 30, 2021 and 2020 were $20,215,110 and $13,797,626, respectively. Operating expenses increased for the nine months ended September 30, 2021 from the nine months ended September 30, 2020 primarily due to an increase in incentive fees, management fees, credit facility fees, and interest expense due to an increase in leverage utilization. Operating expenses per share for the nine months ended September 30, 2021 and 2020 were $0.62 per share and $0.52 per share, respectively.
Incentive Fees
Incentive fees for the nine months ended September 30, 2021 and 2020 were $6,498,482 and $4,871,906, respectively, incurred primarily due to net investment income. Incentive fees increased for the nine months ended September 30, 2021 from the nine months ended September 30, 2020 primarily due to an increase in net investment income arising from prepayments. $5,140,115 of the incentive fees for the nine months ended September 30, 2021 were earned, payable in cash, and included under Accrued incentive fees on the Statement of Assets and Liabilities as of September 30, 2021. $1,358,367 of the incentive fees for the nine months ended September 30, 2021 were deferred and accrued, and included in Accrued incentive fees on the Statement of Assets and Liabilities as of September 30, 2021. $3,659,134 of the incentive fees for the nine months ended September 30, 2020 were earned, payable in cash, and included under Accrued incentive fees on the Statement of Assets and Liabilities as of September 30, 2020. $1,212,772 of the incentive fees for the nine months ended September 30, 2020 were deferred and accrued, and included under Accrued incentive fees on the Statement of Assets and Liabilities as of September 30, 2020. Incentive fees related to PIK or deferred interest are accrued and payment is deferred until such interest is collected in cash. Incentive fees per share for the nine months ended September 30, 2021 and September 30, 2020 were $0.20 and $0.18 per share, respectively.
Net Investment Income
Net investment income for the nine months ended September 30, 2021 and 2020 was $33,563,330 and $27,040,008, respectively. Net investment income increased for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, primarily due to an increase in interest income resulting from an increase in the size of the investment portfolio and an increase in prepayments. Net investment income per share for the nine months ended September 30, 2021 and 2020 was $1.04 per share and $1.02 per share, respectively.
Net Realized (Loss) on Investments
The net realized loss on investments of $4,076,766 for the nine months ended September 30, 2021 was primarily due to the loss on a portion of our investment in the preferred stock of CareCloud, Inc. The net realized loss on investments of $5,370,702 for the nine months ended September 30, 2020 was primarily due to the loss on our senior secured loan to Aginity, Inc.
Net Change in Unrealized Appreciation (Depreciation) on Investments
Net change in unrealized depreciation on investments of $3,172,841 for the nine months ended September 30, 2021 was primarily due to decreases in the fair value of our senior secured loans to Pivot3 Holdings, Inc. and our investment in the preferred stock of Pivot3 Holdings, Inc. This was partially offset by an increase in the fair value of our investment in the common stock of Ouster, Inc. and Brilliant Earth LLC. The net change in unrealized appreciation on investments of $4,561,255 for the nine months ended September 30, 2020 was primarily due to increases in the fair value of our investments in the warrants of MTBC, Inc. This was partially offset by decreases in the fair value of our senior secured loan to Pivot3, Inc. and our investment in the preferred stock of MTBC, Inc.