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53. Bull, Bear & Beyond – Molten Ventures: executive interviews: Valuations image

53. Bull, Bear & Beyond – Molten Ventures: executive interviews: Valuations

S1 E53 · Bull, Bear & Beyond by Edison Group
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6 Plays10 months ago

In this segment, Wilkinson discusses the current venture capital valuation environment, noting a split between AI-driven companies or perceived winners receiving high valuations and others struggling to raise capital. He explains how Molten Ventures follows the IPEV guidelines, being slow to mark assets up and quick to mark them down when necessary. The group’s exits above carrying value over eight years have validated this careful valuation strategy.

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About ‘Bull, Bear & Beyond’

Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.

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Original interview published on 10/02/2025 and reposted as a podcast

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Transcript

Stable Valuations in VC-backed Portfolios

00:00:06
Speaker
And in terms of the current valuation environment for VC-backed companies, you know, you've seen stable portfolio valuations, relatively few fair value mo movements and and exits have been done at um somewhat above your the

Bifurcation in New Deal Valuations

00:00:20
Speaker
carrying value. yeah Can you discuss the valuation environment that you're seeing at the moment?
00:00:26
Speaker
Yeah, I think there's always two parts. One is valuation for new deals. And I think the venture ecosystem in in in Europe, which is where we we look to invest in new companies, is being a little bifurcated between kind of AI-driven or perceived winners taking quite significant multiples on

Interest Rates and Valuation Perceptions

00:00:45
Speaker
valuations. And then perhaps some of the other companies struggling a little more to raise capital. Through 24, we probably saw that ah picture improving, we saw more VC funds raising new new capital sources um and I think into 25 we'll see that unwinding somewhat. VC is because of its long-term nature is very much correlated to interest rates as well so we'll see kind of macro swings playing a a significant factor in in in the perception of interest rates, but then that then feeds through to the perception of of valuation

Marking Assets with IPAV Guidelines

00:01:19
Speaker
multiples. So that I think that will continue, although we're probably, ah it fair to say that the last couple of years we've been through the worst of that.
00:01:27
Speaker
From our own portfolio perspective, we follow the IPAV guidelines and we're very sensible about how we mark our assets. We're slow to move them up in in terms of increasing value and we're ensuring that we move them down in advance when we're starting to see that the companies may not be hitting some of their proof points that we'd want to see.

Proven Valuation Track Record

00:01:47
Speaker
And over the eight years that we've been listed, that's proven to be the right way to approach our valuations and we've had then the the cadence of realizations that that really give the yeah the litmus test to investors to show that we've been holding them at the right levels. And so I'm happy with the way that we've moved the assets up and I'm happy with the way that we've we've subsequently moved them down if they haven't hit their targets. And I think we've been able to demonstrate to investors that we've been very sensible about those marks.