Molten Ventures slumps to first half loss as tech downturn hits
Listed venture capital investor Molten Ventures has slumped to a loss in the first half of the year after its tech investments were battered by a downturn on the markets.
The FTSE-250 firm, previously known as Draper Esprit, said its portfolio value had tumbled to £1.45bn in the six months to the end of September, down from £1.53bn in March.
Molten also reined back its investments in the period and pumped £112m into firms, alongside £17m from the enterprise investment scheme and venture capital trust funds, compared to £164m and £4m in the same period last year respectively.
The fall led Molten to a loss after tax of £155m after posting profits of £218m in the six months to the 30th September.
Martin Davis, CEO at Molten Ventures, said the firm had “not been immune” from the challenging market conditions for technology firms in the first six months of its year.
“Wider macroeconomic factors – rising inflation and global interest rates – have impacted public markets and particularly the valuation of technology stocks and, in turn, this has fed through into the private arena where valuations have also declined, and investment capital has slowed,” he said.
“However, our portfolio has demonstrated strong revenue growth and considerable relative valuation resilience, particularly compared to the performance of some of the listed technology stocks and indices such as NASDAQ.”
The figures underscore a downturn in the venture capital industry this year as firms begin to turn off the taps after a funding boom in 2021 saw record amounts of capital pumped into technology businesses.
Analysts at investment firm Pitchbook said earlier this month that VC investment would flatten out in the fourth quarter and begin to slide next year as central banks continue to hike interest rates and make cash more expensive.
“The shift in monetary policy from historically low interest rates that promoted growth, spending, and borrowing is notable and its impact on the VC dealmaking environment will be clearer as we progress into Q4 2022,” said Nalin Patel, lead analyst, EMEA Private Capital at Pitchbook.
“VC deal activity growth has been considerable year-over-year (YoY) during the past decade, and we believe a flattening could take place in 2023, rather than a sharp decline.”