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Molten Ventures Plc: Interim Results
Molten Ventures Plc (GROW; GRW) Molten Ventures Plc ("Molten Ventures", "the Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
Molten Ventures (LSE: GROW, Euronext Dublin: GRW), a leading venture capital firm investing in and developing disruptive, high growth digital technology businesses, today announces its interim results for the six-month period ended 30 September 2024.
*The above figures contain alternative performance measures (“APMs”) – see the notes below for reconciliation of APMs to IFRS measures.
Highlights • £76m in realisations which would rise to £124m following the anticipated post period completion of M-Files which remains subject to regulatory approval. This would surpass the guidance given at the 2024 full year results to realise proceeds in the region of £100m this financial year. • Acquired a significant majority position for £19m in Connect Ventures Fund I, a 2012 fund vintage. • Three primary new investments with one investment in transit made with a combined funding of £13m; £8m in twelve companies for follow-on deals; with a further £7m invested in Fund of Funds (“FoF”) and £4m in Earlybird funds. • Overarching composition of the portfolio remains balanced and well-funded, with portfolio companies transacting, in aggregate (via capital raise or secondary), more than £800m of capital during the last 12 months. Core companies ISAR Aerospace, ICEYE, RavenPack, Revolut and Riverlane, all raised capital or transacted at higher valuation rounds. • Core Portfolio average forecast gross profit margins of 70% for the 2025 calendar year compared to 68% for the 2024 calendar year. • Forecast weighted average revenue growth of the Core Portfolio of 71% for the 2024 calendar year and forecast to be 48% for the 2025 calendar year. • Executing on capital allocation strategy, including completion of £10 million share repurchase programme in September 2024 utilising a proportion of realisation proceeds. • Our ESG and Sustainability efforts continue to evolve, including our third disclosures to both CDP and PRI; providing tailored support to portfolio companies through 1:1 engagements; the distribution of our Sustainability Toolkit and continued financial support to new portfolio companies for their own emissions assessment and reduction efforts. Ben Wilkinson, CEO at Molten Ventures, commented:
“Announcing today’s results as CEO, for a period in which I was CFO, I am pleased to report that realisations have been a highlight in the first half of the year and we have already surpassed the guidance provided at our full-year results, further validating the quality of our portfolio and the robustness of our valuation methodology. Since IPO Molten has realised in excess of £600 million providing us with further capital to both support founders and grow and scale our business. “We anticipate a more stable investment climate as visibility over the cost of capital improves, which should support stronger market valuations and increased fund deployment, both from private VCs and through our own capital. As interest rates stabilise, we expect to see more aligned views between buyers and sellers, leading to greater market activity. To realise this potential, we reaffirm our focus on our core business, driving strong investment returns for all stakeholders. I look forward to outlining my priorities in further detail at the full year.” Results presentation A live webcast of the presentation including Q&A will be held today at 9.00am for analysts and will be available on https://brrmedia.news/GROW_HY25. Conference call details for the Q&A are available via Sodali.
In addition, Molten will provide a further presentation for retail investors via the Investor Meet Company platform at 10.00 on 22 November 2024. Existing and potential investors can sign up to Investor Meet Company for free via the link below.
https://www.investormeetcompany.com/molten-ventures-plc/register-investor
Half Year Report and Accounts The Company’s Half Year Report and Accounts for the six months ended 30 September 2024, will also be available to download from the Company’s website at https://investors.moltenventures.com/investor-relations/plc/reports The Company has also submitted its Half Year Report and Accounts for the six months ended 30 September 2024 to the UK National Storage Mechanism (available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and Euronext Dublin (available for inspection at https://direct.euronext.com/#/oamfiling). This announcement constitutes the material required by DTR 6.3.5 to be communicated in unedited full text through a Regulatory Information Service.
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About Molten Ventures Molten Ventures is a leading venture capital firm in Europe, developing and investing in disruptive, high growth technology companies. We inject visionary companies with energy to help them transform and grow. This energy comes in many forms - capital, of course, but also knowledge, experience, and relationships. We believe it is our role to support the entrepreneurs who will invent the future, and that future is being built, today, in Europe.
As at 30 September 2024, Molten Ventures had a diverse portfolio with shareholdings in 100+ companies, 18 of which represent our Core Portfolio holdings and account for 61% of the Gross Portfolio Value. Our core companies include Revolut, Thought Machine, Coachhub, Form3, Aiven, Ledger and Aircall. We invest across four sectors: Enterprise Technology, Hardware and Deeptech, Consumer Technology, and Digital Health and Wellness, with highly experienced partners constantly looking for new opportunities in each. We look for high-growth companies operating in new markets, with aspirations for global expansion, strong IP, powerful technology, and strong management teams to deliver success. We also look for businesses with the potential to generate strong margins to ensure rapid, sustainable growth in substantial addressable markets.
Molten Ventures provides a unique opportunity for public market investors to access these fast-growing tech businesses, without having to commit to long term investments with limited liquidity. Since our IPO in June 2016, we have deployed over £1bn capital into fast growing tech companies and have realised over £600m to 30 September 2024.
For more information, go to https://investors.moltenventures.com/investor-relations/plc
Chief Executive’s review I am privileged to have the opportunity to continue the evolution of the business. Molten has a strong platform to build from for the next phase of growth, with a leading investment team that has a unique skillset to take the business forward. Overview Having stepped up as CEO at the time of our trading update for the six months to 30 September 2024, we are grateful to Martin for the critical role he has played in the development of Molten into the unique and leading business it is today. I am privileged to have the opportunity to continue the evolution of our business building upon my insight as CFO during the period. I will be supported by Andrew Zimmermann, our former Finance Director, who will take over as Interim CFO. Molten has a strong platform to build from for the next phase of growth, with a leading investment team supported by a strong platform that has a unique skillset to take the business forward. Our long track record of identifying and backing high-growth, globally disruptive technology companies demonstrates this expertise. The most salient feature of the six months is the significant acceleration in realisations, which has reached a value of £76 million and would rise to £124 million following the anticipated M-Files realisation subject to regulatory approval due in Q4, 2024. This surpasses our original guidance of realisations of £100 million for the full year, and has generated cash proceeds which will allow us to take advantage of further attractive opportunities. In our full-year results in June, we spoke about cautious optimism in the stabilising economic climate. This sentiment still prevails, with attractive entry pricing and an opportunity to deploy capital into the right deals, particularly in the secondary market. We remain well positioned to take advantage of the best opportunities as and when they arise. The gross portfolio fair value uplift in the existing portfolio is modest, while we report a £36 million decline in total gross portfolio value, this is driven primarily by realisations exceeding the investment level of £51 million for the period and adverse foreign currency movements. With the pace of innovation continuing to accelerate and companies remaining private for longer, Molten provides unrivalled access to high growth businesses through our listed, liquid structure at critical stages of their growth. Market environment Over the past six months, the global macroeconomic environment has continued to pose challenges, however, there are signs of improvement. Interest rates have begun to stabilise, easing inflationary pressures and signposting to a lowering cost of capital. There have been some signs of the M&A market recovering, along with venture capital firms raising private capital. The venture capital investment market is not currently uniform, and from an investment perspective, we are observing the perceived top tier companies are commanding premium valuations, including the likes of Revolut and OpenAI, while capital is less readily available for the majority of companies. Our Approach We will continue to operate an aligned strategy across our three vehicles: the plc, and the managed EIS and VCT funds. Where investments qualify for EIS and VCT investment, this structure enables us to combine three capital pools to invest in the UK and Europe’s most exciting technology companies in a risk-adjusted and tax-efficient manner for our respective investors. Our broad investment mandate and flexible listed model allow us to support businesses across various stages of growth, from early- stage innovation to more mature companies. This flexibility enables us to deploy capital strategically, both in primary and secondary investments, over a longer time horizon than traditional venture capital models. Meanwhile, our brand, people, and Fund of Funds programme provide us with a broad pipeline of high-quality private technology companies across the UK and Europe. We track, screen, and engage with thousands of companies, targeting 15-30 new and follow-on investments annually. This disciplined investment process also extends to our secondary strategy, where we provide liquidity to later-stage funds, focusing on portfolios with near-term visibility on realisation opportunities. Our unique listed platform and broad investment mandate enable us to identify opportunities and support businesses for the long-term building ownership stakes over time. We have a diversified portfolio of over 100 companies, with the top 18 comprising 61% of our gross portfolio value across sectors and stages, spanning the UK and Europe. We will continue our focus on supporting the best founding teams in the most exciting technology sectors, supported by intelligent capital management. Our experienced team, with active board management of many of our portfolio companies, provides strategic guidance, access to networks, operational support to help them achieve their growth objectives and risk mitigation. To date, we have deployed over £1 billion in capital and realised over £600 million from successful exits, demonstrating our strong track record of value creation for investors. Activity in the year We will continue our focus on secondaries, as highlighted at the time of our fundraising in November 2023. This is a core component of our investment strategy, and remains a key driver of value creation. Over the past six months, we have made significant further strides in this area, most notably with the September acquisition of a 97% stake in Connect Ventures Fund I. This fund, containing eight minority positions in European software companies, is driven by the standout performers Typeform and Soldo, which account for 85% of its value. This transaction represents an excellent example of how our secondary strategy allows us to acquire high-quality portfolios with near-term realisation potential at attractive valuations. In addition, our investments in Seedcamp Fund III (completed in February 2024) and Forward Partners (completed in March 2024) are progressing well. These investments enable us to expand our portfolio into further tech subsectors and leverage our network to secure high- quality secondary opportunities. Portfolio Our portfolio companies have been active in the period, transacting, (via capital raise or secondary), more than £800 million of capital over the last 12 months. Our gross portfolio value table, included on page 23, highlights the fair value uplift of £20 million, excluding adverse foreign exchange movements of £30 million, which is the net of fair value uplifts totaling £110m and fair reductions of £90 million. In August 2024, Revolut announced a secondary transaction via an employee share sale, implying a valuation of $45 billion. Molten has recognised some of this secondary valuation uplift in line with our valuation policy, resulting in a fair value uplift of £62 million, bringing the total fair value to £124 million as commercial traction, product development and broadening customer base continues to be proven. Our valuation of Thought Machine has decreased to a fair value of £63 million (31 Mar 2024: £99 million) in the period, while we have made a valuation adjustment linked to market multiples. This reflects the timing of implementing confirmed customer contracts which had not gone live at the valuation date. Our belief in the upside future value in the business remains as they bring on new customers and look to go live with significant accounts. We remain optimistic about the broader growth potential of the business and its potential to transform the traditional banking sector tech stack. In June, ISAR Aerospace secured £220 million in its Series C funding round. This latest funding will enable ISAR to continue investing in the build-up and equipment for its series production. It is also being used to expand its manufacturing capabilities by building a larger, fully automated factory near Munich. ISAR is planning for its first test launch in Q4 2024, with the long-term goal to produce 40 launch vehicles per year, so they are positioned to serve the private and public sector demand for small and medium-sized satellites and satellite constellations in space. The fair value of ISAR is £23 million. In July, RavenPack, a leading provider of big data analytics for hedge funds and banks, raised $20 million during the period. This funding accelerated the development and launch of RavenPack’s new AI platform, Bigdata.com. This is aimed to support decision-making for financial professions by offering instant insights and analytics based on real-time data sets and global economic trends. The fair value of RavenPack is £36 million. Also in July, quantum computing company, Riverlane closed a $75 million Series C round. This capital will allow Riverlane to scale its operations and meet growing global demand for Quantum Error Correction (QEC) technology, with the ambitious goal of achieving one million error-free quantum computer operations by 2026. Ledger, a security for crypto hardware and crypto wallet, launched two new hardware wallets, Ledger Stax in May, featuring a curved E-Ink display and Ledger Flex in July, both designed to enhance user experience with touchscreen technology. We have recognised a fair value uplift of £4 million, bringing the gross fair value to £64 million. All these companies are at the forefront of their fields, being just some examples from our portfolio, and the recent funding rounds across the portfolio, reflect strong investor confidence in their long-term prospects. Realisations Realisations have been a key highlight in the first half of the year. We have surpassed the guidance provided at our full-year results, achieving £76 million in realisations rising to £124 million, post-period, representing approximately 9% of our Gross Portfolio Value (GPV). These successful exits have been completed at or above holding value, further validating the quality of our portfolio and the robustness of our valuation methodology.
Overall, Molten’s portfolio company exits are on course to represent a significant percentage of transactions across all EU VC-backed exits in 2024, demonstrating the high returns we continue to achieve through our active portfolio management and disciplined investment process. Financial Position We remain in a strong financial position, with the resources necessary to continue supporting our portfolio and capturing new investment opportunities. In July, we secured a £180 million debt facility with J.P. Morgan Chase Bank, N.A. ("JPM") and HSBC Innovation Banking Limited ("HSBCIB") effective from 7 September 2024. This comprises a £120 million term loan drawn on day one and a revolving credit facility (“RCF”) of up to £60 million, both with a three-year tenor, an extension to the previous £150 million facility with JPM and HSBCIB. Our disciplined capital allocation policy ensures that we have the flexibility to deploy capital effectively as and when high quality opportunities arise, while maintaining strong liquidity headroom. Our £10m share buyback programme, as part of this, is now complete. Our cash position, combined with the undrawn capacity of our revolving credit facility, gives us the ability to support our existing portfolio and continue making new investments. Outlook Looking ahead, we anticipate a stabilising investment climate as visibility over the cost of capital improves. We expect the market to support higher activity levels, and with the pace of technological innovation continuing to accelerate, this leaves Europe in a strong position to create the companies that are solving the biggest challenges we face as a society today. Our core focus will remain on supporting our founders and driving strong investment returns for shareholders. This is an opportunity to further grow and scale into the next cycle of the market, which aligns with the potential for deeper pools of capital. To realise this potential, we will reaffirm our focus on our core business. At Molten, we are well-positioned to capitalise on the current and anticipated market conditions. We remain focused on long-term value creation and are confident in our ability to deliver strong returns in the years to come.
Ben Wilkinson Chief Executive Officer
Portfolio review During the period, we delivered strong realisations to return cash proceeds to the balance sheet and provide additional capital to take advantage of further opportunities. We remain well diversified across our four key sectors and confident in our thesis-led, sectoral investment approach. Cash resource within the portfolio is a key focus and our portfolio remains well funded, with over 75% of the core portfolio having more than 12 months of cash runway, and over 50% with more than 24 months. Portfolio valuations The Gross Portfolio Value as at 30 September 2024 is £1,343 million, down from £1,379 million at 31 March 2024. This reflects investments made of £51 million, realisations of £76 million and a gross portfolio fair value decrease (including the impact of FX) of £11 million. Excluding the impact of foreign currency movement, the portfolio fair value grew £20 million. Unfavourable foreign currency movements contributed a £30 million loss. Where there are declines in enterprise valuations within the portfolio, these are tempered by downside protection from preferred share classes. 98% of portfolio companies (directly held investments only) have downside protection, with 18% of the portfolio currently utilising this, meaning that fair value in impacted companies has not decreased in line with Enterprise Value decreases. Our valuations process continues to follow the IPEV Guidelines and reflects relevant market movements in the period as they apply to our portfolio companies. Our portfolio companies expect to continue growing revenue, with weighted average forecast revenue growth in the Core Portfolio of 71% for the 2024 calendar year and 48% in 2025 calendar year. The Core Portfolio is made up of 18 companies representing 61% of the Gross Portfolio Value. The Core Portfolio composition has evolved from the previous reporting period, following the successful realisations of Perkbox, Graphcore and Endomagnetics, and new entrants, in the shape of N26 and SimScale, which join from the emerging portfolio Deployment We have continued to exercise discipline around our investment process, deploying £51 million in the first half of the year, into new and follow-on investments, including a £19 million secondary investment to acquire 97% of Connect Ventures Fund I, a 2012 vintage.
* Disclosed investments over £2 million
*Disclosed investments over £1 million Secondaries Molten Ventures acquired 97% of the Connect Ventures Fund I for £19m. Connect Ventures Fund I is a 2012 vintage fund containing a portfolio of eight minority positions in businesses across Europe. Of these eight assets, c.85% of the value is driven by Typeform, a platform for forms and surveys, and Soldo, a payment and spend automation platform. Molten has previously acquired secondary positions in Seedcamp Funds I, II & III, Earlybird DWES Funds IV and Earlybird Digital East Fund I. Molten’s secondary strategy leverages its network in the venture capital market to provide liquid | ||||||||||||||||||||||||||||||||||||||||