Dear Shareholders and Stakeholders,
With the annual report concluded and AGM around the corner, we take a few moments to reflect on the past year. 2022 was a very productive year for Katalysen Ventures:
- We preserved the portfolios’ overall value, this despite the challenging market climate and strict valuation guidelines. A lot of hands-on work, a model that promotes startup-investor transparency, and your continued support made this possible.
- We proved that a venture developer can build a portfolio by offering expertise and experience, with expertise (contra cash) representing a majority of resources invested in new deals during 2022.
- We were able to optimize where we invest resources in the portfolio, as the challenging market revealed additional data on the potential of individual portfolio ventures. As a result, multiple exit projects could be initiated in early 2023.
- We managed to improve the portfolio’s overall financial sustainability, primarily by advising ventures on how to adapt to medium-term challenges without sacrificing long-term potential, which helped several portfolio ventures reach break-even.
- We successfully listed Katalysen Ventures on Spotlight Market, this despite the extremely challenging public market climate at the time. This was a major long-term milestone for Katalysen Ventures as we seek to improve investor access to start-up-stages (and start-up access to expertise and cash investors).
- We avoided the need to make undesirable exits due to the challenging market, this by raising additional funding which provides Katalysen Ventures with additional time to develop the portfolio while valuations re-acclimate.
- We strengthen our ties to highly professional, strategic, long-term investors, with international investors such as Hallmann Holding and Schütz Family Office strengthening their positions in Katalysen Ventures.
- We made significant progress in projects related to unlocking new, recurring revenue streams for Katalysen Ventures, this to address the negative cash-flow nature of our business model. Such projects are likely to also provide our portfolio with a reliable cash co-investor, which will help the portfolio grow faster.
- We made massive progress in improving the ecosystem awareness for Katalysen Ventures, helped along by a rebrand, new ecosystem events such as the Monthly Fintech Meetup co-organized with the Stockholm Fintech Association, and Katalysen Ventures becoming a publicly listed company.
Despite this progress, some important challenges remained at the end of 2022:
- While our most promising holdings continued to progress, the overall market climate still provides friction in exit projects. More time is needed, and we are grateful for the very strong support from our shareholders who recognize Katalysen Ventures as a unique long-term opportunity.
- Significant write-downs have been necessary in a small number of ventures, in line with our conservative valuation principles. While this is to be expected in venture capital, we are still actively trying to help these individual ventures recover. Overall, such write-downs have been balanced against progress in other holdings.
- Katalysen Venture’s own operations were not optimized for the new market climate, with a smaller but more experienced team proving to be preferrable over a larger but (on average) less experienced team. This was addressed in early 2023, through a readjustment that resulted in a smaller, less costly, yet more experienced team well suited to drive both exit and development projects forward in the portfolio.
- The traded volume of the share has been low, which can result in suboptimal pricing of the Katalysen Ventures share on public markets. While overall public market activity has been very low in Sweden, we will seek to address this challenge during 2023.
As communicated in an article published on our website on the 6 of April 2023, we see a convergence of favorable factors making early-stage companies increasingly attractive investment targets:
- Disruptive innovation platforms and trends (such as Open AI, Open Finance, etc.) are expected to create massive equity value leading up to 2030.
- Early-stage VC valuations have been normalized during 2022, creating an excellent opportunity to buy.
- Terms now favor investors, with investor-friendliness almost back to 2010 post-crisis levels.
- Billions of dollars in unallocated capital are sitting on the side-lines. There is a lot of money waiting to be deployed in start-ups that proved themselves during 2022-23.
- The Nordics have an excellent track record when it comes to produce world-leading start-ups, and the relatively weak SEK provides an additional currency opportunity for international investors looking at the Nordics.
We are confident that Katalysen Ventures is well-positioned for continued success in 2023 and beyond. We remain committed to our mission of driving innovation and creating value for all involved stakeholders, and we are excited to continue partnering with our portfolio ventures to help them achieve their goals. We thank you for your continued support and confidence in Katalysen Ventures, we look forward to seeing you at the AGM, and to update you on our progress in the coming year.
Peter Almberg, CEO