Molten Ventures has reported a decline in its portfolio valuations of 35% on average.
The London- and Dublin-listed venture capital firm, which invests in and develops high-growth digital technology businesses, reported gross portfolio value of around £1.5 billion, down slightly from six months previously, in its results for the period ended 30th September 2022.
It insisted the performance was ‘relatively resilient’ against the challenging public market backdrop.
The valuations have been ‘calibrated to reflect public market peers, leading to a reduction in enterprise value in the core portfolio on average of 35%’, it said.
More than 75% of its core portfolio has more than 18 months of cash runway, with revenues growing at an average of over 60% with forecast growth of 70% for 2023.
Cash proceeds in H1 of £13 million were realised by exits from UiPath and Minit, via Earlybird.
“Although the IPO market remains weak, historically, the majority of the Group’s realisations have been through trade sales,” Molten said.
The VC invested £112m in the period – during which it took out a new debt facility of £150m with JP Morgan Chase Bank and Silicon Valley Bank – with a further £17m invested by EIS and VCT, bringing the total invested for H1 to £129m.
Cash on the group balance sheet at period-end was £28m, compared with £78m at the end of March 2022.
“Nasdaq has declined 25% in the past six months while technology sub-sectors such as semiconductors and eCommerce have declined further,” said Molten. “In the private markets deployment of investment capital has slowed while companies, and investors, adapt to an environment with a higher cost of capital.
“While it is disappointing to report a decline in valuations, Molten’s relative resilience is testament to our long-held consistent approach to valuing our portfolio companies across the cycle. While much of the movement during the period has been driven by sharp downward movements in a number of our key core assets, our portfolio is well diversified, with over 70 companies across four sectors at different stages in their development.
“We believe that our thesis-led, sectoral investment approach which has stood the test of time across previous cycles, together with our robust valuation process and active management value that Molten brings to its portfolio companies, will continue to serve us well.”
CEO Martin Davis added: “We have built our model to capture upside and minimise downside, and we continue to invest funds and deploy our expertise to maximise value in our portfolio.
“Nevertheless, recent changes in public markets and our approach to valuation in line with the relevant guidelines have led us to report a decrease in fair value.
“We have maintained an ongoing engagement with our portfolio companies to build a clear understanding of their cash needs and maintain sufficient resources to support them as they navigate their way through uncertain markets, particularly given their own balance sheet strength.”