Katalysen Ventures launches new investment framework on the company’s venture developer platform
As outlined in the text titled “Lessons learned from five years of venture development,” published in March 2024, Katalysen Ventures AB (publ) (“Katalysen”, the "Company”) has amassed significant venture development data and experience since the company’s inception. Drawing upon these insights, along with the execution of two “proof-of-concept” transactions during the winter of 2023-2024, Katalysen is now formally introducing a new investment framework to the Company’s venture developer platform. For the full version of this text, visit www.katalysen.com.
This new framework, known as the Venture Targeter Framework (“VTF”), signifies Katalysen's transition into a next phase of venture development. With VTF, employing a smaller in-house team, the Company is capable of delivering superior expertise, generating increased value within a shorter timeframe (3 months instead of 3 years), and sustaining its status as a highly agile investor adept at capitalizing on short- and medium-term market opportunities.
Phase two and VTF in short:
- Emphasis on making fewer, but more carefully structured investments, often focused on removing barriers to growth, particularly in connection with so-called “special situations” (e.g., saving a venture following bankruptcy).
- Creation of a Special Purpose Vehicle ("SPV") for each investment opportunity.
- Katalysen facilitates the pooling of cash, expertise, and network into the SPV.
- Investment by the SPV into the target venture, potentially alongside other third-party co-investors.
- Short-term focus on the SPV’s role in restructuring and revitalizing the invested venture, with long-term provision of resources necessary for the venture’s growth (clients, investors, advisors, etc.).
As of March 2024, Katalysen has successfully executed two transactions using VTF: Venture Targeter 1 (VT1), investing in Swedish biotech venture QuTEM, and Venture Targeter 3 (VT3), investing in German healthtech venture S4DX. The sequential numbering of these transactions offers a clue to our simultaneous involvement in multiple projects.
VT3 and its investment into German healthtech venture S4DX was completed in March 2024, and as such it is too early to fully evaluate the venture’s progress following the transaction. However, the following is certain:
- Acquisition context: Due to problems related to the ownership structure, S4DX encountered financial difficulties.
- Investment opportunity: Experts in the healthtech sector informed Katalysen about the potential of S4DX. The uniqueness of the S4DX product, in addition to S4DX’s impressive list of current clients and current sales pipeline, were noted. A consortium led by Katalysen secured and finalised the acquisition by VT3 from the liquidator.
- Previous valuation vs. acquisition cost: Due to problems related to the ownership structure, it was possible to acquire S4DX at extremely affordable valuation multiples.
- Strategic significance: The low acquisition cost presents a unique opportunity for rapid and substantial value appreciation.
- Katalysen’s contributions included:
- Structuring and facilitating the re-structuring of S4DX and investment using VTF (VT3).
- Engaging vital expertise within the sector with focus on accelerating sales.
- Securing vital clients and partners, essential for S4DX's future growth.
- Facilitating investments to sustain S4DX until positive cash flows are achieved.
- Successfully negotiating with the liquidator, presenting a compelling revival plan critical in outbidding other contenders.
- Successfully negotiating with staff and new organization.
- Progress post transaction: Key talent was retained, and the rejuvenated team is making swift progress in scaling S4DX following the restart. VT3 team is mainly engaged in new sales and partnerships. Already several new clients on board, mere weeks following the restart.
Katalysen is excited to continue to invest alongside Katalysen’s exceptional network, and the Company invites all shareholders to get in touch to discuss potential VTF cases where mutual value creation is possible.
