Months ahead28 May 2023 05:37
Money flowing back into listed tech especially AI listed tech bound to eventually flow upstream to unlisted funding round tech and especially ai tech such as the core portfolio companies we have. As we approach our final results and with that more reassuring valuation detail we should rise quickly from here.
Shortcut to us getting back our mojo (sp above 10 quid) is for the late round unlisted tech funding for the funding round market to come back to 2019 levels and sales multiples. That might occur this year. Fear of the late funding round market collapsing (no evidence of that just a theory it might) is what is holding our SP below 5 quid. Fear is if late funding round market is frozen than our core companies that have exhausted their runway, cut back on expenses as much as they can and need to go to market will get a humiliating share diluting down round well beyond the implied theoretical down round currently on our GROW books. No evidence that is happening (some who went to market got a valuation in line with previous valuations) but a theoretical possibility if the late round market deteriorate further. Evidence it will deteriorate further is surely the health or not of the market for listed tech. At least at the top end listed tech is now in line with 10 year trends and 2021 just a blip upwards that has corrected itself.
2021 and the first half of 202 was out of trend but not massively out of trend for our GROW valuations. Not all of our companies went to market in that period and those that did we discounted a bit, plus GROW’s preference share effects not properly priced in and the conservatism of our valuations relative to what they might have been in September 2021 at the peak mean we were never that far “overvalued”’ in 2021 and with organic growth of the portfolio we should be OK on our valuations as they stand even in this market with more chance of an upside correction than a downside correction.
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