Half year trading update and notice of results

Molten Ventures plc

("Molten Ventures", "Molten", or the "Company")

Half year trading update and notice of results 

Continued portfolio resilience

 Molten Ventures (LSE: GROW, Euronext Dublin: GRW), a leading venture capital firm investing in and developing high-growth digital technology businesses, today announces an update on its portfolio and NAV (unaudited) ahead of its interim results for the period ended 30 September 2023, due to be announced on 22 November 2023.

Highlights:

• Gross Portfolio Value (“GPV”) (unaudited) is expected to be circa £1,300 million (30 September 2022: £1,450 million; 31 March 2023: £1,371 million).
• Valuation environment is stabilising and portfolio performance continues to be resilient, with our management teams striking a good balance between growth and capital efficiency, with very limited exceptions.
• This is reflected in Fair Value Movements across our portfolio reducing by -3.6% (6 months to March 2023: -2.1%; 6 months to September 2022: -17.2%). Overall, whilst volatile conditions persist, the core portfolio remains high quality, well-funded, focused on capital efficiency, with the majority of the portfolio continuing to demonstrate strong growth.
• £17 million invested from Molten’s balance sheet over the period (30 September 2022: £112 million), with a further £35 million deployed from our managed EIS and VCT co-investment funds (30 September 2022: £17 million).
• Realisations generated cash proceeds for Molten in the period of £33 million, with realisations exceeding investments for two consecutive half years.
• NAV per share (unaudited) is expected to be approximately 735p (30 September 2022: 837p; 31 March 2023: 780p).
• The Company expects to continue its disciplined approach to capital allocation in the second half, between existing portfolio companies and attractive new opportunities in what remains clearly a buyers’ market.

Portfolio performance and fair value movements:

• Fair value reduction, in the six-month period to 30 September 2023 of £50 million excludes foreign currency movement. Fair value movements reflect the net of £20 million increases offset by reductions of £70 million. The reduction in fair value includes specific provisions on one core and two emerging companies.
• Portfolio companies are focused on efficiency and cash preservation. As such, revenue has continued to grow, demonstrating continuing demand for their products in their respective target markets, albeit at a slower pace while the portfolio adapts to the current volatile environment.
• Continued discipline in capital allocation has led to a reduction of capital deployed in the period with new and follow-on investments totalling £4 million, with a further £13 million invested in Fund of Funds and EarlyBird.
• In the period we have generated cash proceeds of £33 million, of which £17 million relates to Direct investments including our final exit of shares in Trustpilot, and a further £16 million in realisations of Fund of Funds and EarlyBird.
• Our portfolio remains well funded with over 80% of the core portfolio having more than 12 months of cash runway, and over 50% is more than 24 months.
• Company valuations continue to be supported by evidence from recent external capital raises. In the last 12 months our portfolio companies, such as Riverlane and Form3, have raised £467 million in aggregate. Of the rounds raised over 85% were at a flat or increased valuation.
• As a feature of our investment model, 97% of the portfolio holds downside protection through preferred share classes providing priority rights on invested capital at the point of realisation.

Cash resources and investment cadence:

• Discipline around our deployment process remains a focus, with realisations exceeding the amount invested in the period. We continue to selectively target new investments in exceptional, innovative, early-stage companies such as Oliva and Binalyze.
• Molten’s balance sheet has been preserved over the six months with cash as at 30 September 2023 of £24 million, and a further £40 million available for investment by our managed EIS/VCT funds.
• Our Revolving Credit Facility remains undrawn, with capacity of up to £60 million providing further funding flexibility subject to availability and certain drawing conditions.
• Operating costs (net of fee income) are expected to be below the targeted 1% of period-end NAV at ~0.4%.
• The funding requirement within the portfolio remains in line with previous guidance of £20 million in FY24.

Strategic and operational review

Overall Molten’s portfolio remains well-funded, and due to its resilience and our focus on cash preservation in the period, we continue to anticipate follow-on funding to be in line with the guidance previously provided in June. During the past six months, we continued to see extended deal timelines with fundraising, exits and new investments taking longer to complete due to increased levels of due diligence.

Molten continues to respond adeptly to this challenging market environment. Having built our platform to invest for the long-term and throughout the cycle, the depth of experience across our management and investment teams allows us to take an active approach to portfolio management as we respond to these more challenging times. Our consistent approach to valuations and to diverse portfolio construction (both in terms of the sectors and stages we invest in) has enabled Molten to remain resilient.

In the period, Molten has also continued to build out its team and its third-party assets strategy, which is an increasingly important part of our business. In September, we appointed Lara Naqushbandi as a non-executive director, bringing further expertise to our Board. In July we announced the launch of our Irish Fund, alongside the Ireland Strategic Investment Fund (“ISIF”), to back high growth technology companies whose core activities, management and expertise are in Ireland. Molten has a long history in Ireland, and this co-investment capital gives us an opportunity to build on that heritage in a risk-adjusted fashion. We are also committed to developing our Fund of Funds programme following its successful first close and syndication last year.

Martin Davis, Chief Executive Officer of Molten Ventures, commented:

“Our portfolio continues to perform resiliently against challenging market conditions for disruptive, high-growth technology companies and those who invest in them.

While macroeconomic uncertainties continue to weigh on the environment for realisations, we’re now beginning to see the fundraising market becoming more aligned to the new realities. Our focus for both Molten and our portfolio is on disciplined capital allocation, positioning ourselves to capture exceptional opportunities as the valuation environment stabilises”.

Notice of Interim Results:

Molten Ventures announces that the Company’s Interim Results are scheduled for release on 22 November 2023. Presentation and conference call details will be confirmed in due course.

-ENDS-

Enquiries: 

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 2023, Molten Ventures had a diverse portfolio with shareholdings in 74 companies, 17 of which represent our core portfolio holdings and account for 62% of the Gross Portfolio Value. Our core companies include 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 £520m to 30 September 2023.

For more information, go to https://www.moltenventures.com/