A major investor in Graphcore has cut its valuation by more than 80% over the past three years amid reports the struggling British chipmaker is in rescue takeover talks.
London-listed Molten Ventures, which participated in Graphcore’s series E funding round in 2020, had estimated its stake in the business at $109 million in 2021, making it the most valuable company in its portfolio at the time. But since then it has repeatedly slashed the value of the investment, which has sunk from $37 million last year to just $20 million in results published today – falling below the cost of its initial investment.
That would suggest the company’s total value has sunk from the $2.77 billion (£2.2 billion) reported in the 2020 funding round to around $500 million today. Some shareholders have published even harsher write-downs. Last year, California-based venture capital firm Sequoia cut the value of its stake in the startup to zero.
Graphcore’s hopes to become a major player in supplying chips to the rapidly-growing AI industry appear to have come under strain, with the firm’s most recent accounts showing that its pre-tax losses grew 11% to £161 million in 2022. According to a Bloomberg report, Japanese conglomerate SoftBank has entered talks to acquire the business.
Molten Ventures CEO Martin Davis told the Standard: “There’s been a lot of speculation and market comment about Graphcore.
“[The shareholding] is not material for us as a business. We’ve been in that company for a long time. We’re not constrained by timing, we can always wait until the right time [to exit].”
Shares in Molten Ventures jumped more than 10% to top 370p today as the venture capital business posted a small rise in the gross value of its portfolio to £1.4 billion and hailed a ‘strong realisation pipeline’.
The firm, which recently acquired London-listed rival Forward Partners, said it had been boosted by more robust economic conditions, adding it expected “to see a step up in realisations, in the region of £100 million of capital back to the balance sheet this financial year, the proceeds of which we expect to deploy towards NAV per share accretive opportunities.”
.Over 85% of companies in Molten’s core portfolio had at least 18 months of cash runway by the end of March, the firm added, while its stake in fintech giant Revolut was uplifted by around £10 million.
“We’re starting to see some stabilisation coming into the private markets,” he said.
“After a period with a lack of liquidity, the fact that M&A activity is moving on is encouraging.”
Davis added that he expected falling interest rates were set to have a positive impact on the value of portfolio companies in the second half of the year.
