The chief financial officer of venture capital business Molten Ventures has warned of a “bifurcation” in the success of venture capital between the US and Europe.
Ben Wilkinson told City A.M. that while US venture capital funds had performed “very well”, the European market “hasn’t quite managed to catch up”, creating a significant lag effect between the two.
Molten Ventures is currently valued at £457m by the market, despite its portfolio of companies being worth £1.4bn, with the significant gap between the two having persisted for some time for the firm.
Wilkinson credited this split to a “lack of liquidity in public fund managers, as well as outflows from UK and European managers over the last eighteen months”.
UK asset managers have struggled to hold onto investor money over the last year, as just today Jupiter Fund Management reported £1.6bn in withdrawals over the first quarter of 2024, leaving less money to be pumped into the venture market.
However, Wilkinson is keen to make the most of this situation, stating that “we’ve really been looking at the disconnect occurring in our market, and seeing there’s been a reduction in liquidity in the market and therefore a lot of potential sellers of good assets”.
Molten Ventures recently made two acquisitions, fellow VC group Forward Partners and a stake in Seedcamp’s Fund III.
This has been boosted by the firm’s £55m capital raise in December, which Peel Hunt analysts said last week “solidifies its financial position and bolsters its ability to support its core assets, which already had solid cash runways”.
Now, Wilkinson was keen to “take advantage of depressed prices in the market” and said he “certainly will” be looking to make further acquisitions of venture capital groups and funds.
“We’re looking to do that where we see attractive prices,” he said.
The company revealed in a full-year trading update today that the group had seen its gross portfolio value grow by £6m throughout the year, though this includes £65m of fundraising and £39m of realisations.
Wilkinson added that he hoped this financial year “will be much stronger for realisations” as the M&A market improves, allowing the firm to ‘prove itself’ by selling off assets at what Molten Ventures values them at.
“We hope to have a sequence of realisations to prove that,” the CFO said.