Molten Ventures has significantly reduced the valuation of its stake in Thought Machine, a fintech firm, impacting its London IPO ambitions.
- Molten Ventures VCT reported a near 40% decrease in Thought Machine’s value from March to September 2024, falling to £5.9m.
- This change suggests a decreased return on investment multiple for the company, moving from 4x to 2.5x in potential exits.
- The valuation cut is attributed to contracts not yet being signed, although growth potential is still seen by Molten Ventures.
- Founder Paul Taylor expressed determination to pursue a London IPO, despite challenges, citing investor influence.
In a notable financial adjustment, Molten Ventures, a British investor, has reduced the valuation of its stake in Thought Machine, indicating a potential drop of around $1 billion in the fintech firm’s market worth. According to the investor’s half-year reports, the valuation saw a steep decline of nearly 40% between March and September 2024, plummeting to £5.9 million. This adjustment reflects a significant decrease in the return on investment multiple from 4x to 2.5x if the stake were to be sold today.
Thought Machine, with aspirations for a London IPO, faces potential challenges from this valuation decline. The company’s founder, Paul Taylor, had recently reinforced to financial circles his intent for a public listing, highlighting London as the choice location. Taylor noted, “London is our home, and all other things being equal, we’d be very keen to list in London.” However, he acknowledged the substantial role existing investors play in such strategic decisions, with many UK firms choosing to float in the US due to the allure of New York’s market dynamics.
The valuation reduction was explained by Molten Ventures as being due to some customer contracts that were anticipated but had not been finalised by the valuation date. Despite the drop, Molten Ventures expressed continued optimism about Thought Machine’s capacity for growth, noting the company’s ongoing efforts to acquire new customers and activate significant accounts. They maintained belief in the company’s potential to revolutionise the traditional banking infrastructure.
Previously, Thought Machine had reached a valuation of $2.7 billion in May 2022 following a substantial $160 million funding round spearheaded by institutional investors such as Morgan Stanley. The recent valuation decline has prompted scrutiny on the timing and completion of customer contracts that are pivotal to further financial stability and growth.
Despite a significant valuation adjustment, Thought Machine remains committed to growth and a potential London IPO, driven by potential market expansion.
