Katalysen Ventures publishes report for the Third Quarter 2023

Katalysen Ventures AB (publ) hereby publishes the report for the third quarter of 2023. The full report is available immediately as an attached document, and on the company's website. Below is a summary of the report.

General KPIs [thousand SEK]:

Q3 2023 Group, (Q3 2022 in brackets)

• Net sales: 44 (1 254)
• Profit after financial items: -5 194 (-2 801)
• Balance sheet total: 89 271 (102 508)
• Solidity: 94% (97%)
• Earnings per share: -0.75 (-0.50)
• Number of outstanding shares: 6 924 185 (5 570 995)

Q3 2023 Parent company, (Q3 2022 in brackets)

• Net sales: 44 (1 254)
• Profit after financial items: -4 719 (- 1 356)
• Balance sheet total: 90 623 (101 056)
• Solidity: 98.2% (98.6%)
• Earnings per share: -0.68 (-0.24)
• Number of outstanding shares: 6 924 185 (5 570 995)

KPIs (last period in brackets):

• Number of ventures in portfolio at end of period: 25 (24)
• Estimated portfolio market value at end of period: 161 MSEK (167 MSEK)
• Cash resources in bank at end of period: 0.4 MSEK (0.7 MSEK), note that 1'200'000 warrants were issued after the period at a price of 3.12 SEK per warrant

Important events during the period

• 07-10: Katalysen Ventures completes a directed share issue of 248’967 new shares, raising proceeds of approximately SEK 3.7 million.
• 08-11: Katalysen Ventures announces deal with fast-growing digital forensics company Valega Chain Analytics, which will lead to the merger of portfolio company Alaco Analytics and Valega.
• 08-15: Katalysen Ventures publishes report for Second Quarter 2023.
• 08-22: Katalysen Ventures publishes notice for an EGM in Katalysen Ventures AB (publ), at which the shareholders will be asked to approve a proposed issue of warrants.
• 08-28: Katalysen Ventures celebrates milestone partnership between portfolio company Meal Makers and Sodexo, bringing Sodexo onto Meal Makers digital platform for food inputs.
• 09-06: Katalysen Ventures and corporate finance firm Naventus forge partnership to unlock financial advice and strategy expertise for Nordic entrepreneur-led companies.
• 09-07: Katalysen Ventures announces increase in total number of shares following completed registration ofshare issue. The new total is 6’924’185 shares.
• 09-07: Katalysen Ventures announces that Payer Financial Services AB has begun a company reconstruction (”företagsrekonstruktion”).
• 09-07: Katalysen Ventures publishes a communique from the EGM, at which the shareholders decided to approve a proposal from the Board of Directors to carry out an issuance of warrants.
• 09-14: Katalysen Ventures announces that Vironova AB has declared bankruptcy, with a predicted impact on the total portfolio value of – 0.4 MSEK.
• 09-22: Katalysen Ventures announces an extension to the subscription period in the warrant issue.

Important events after the period

• 10-03: Katalysen Ventures closes a fully subscribed warrant issue with strong backing from the company’s operational team. In total, 1’200’000 warrants will be issued at price 3.12 SEK, of which approximately 3 MSEK will be added to the company’s cash reserves.

• 10-11: Portfolio company Manico AB announces strong sales traction and forecasted profitability for 2023.

• 10-24: One of the Company's anchor investors, Alex Schütz Familienstiftung, has recently acquired the entire remaining shareholding of MHomman AB. This successful acquisition accounts for 3.0% of Katalysen's total outstanding shares and is expected to enhance the stability of the Company's shareholder base.

• 10-27: Katalysen Ventures publishes a notice for an EGM, to be held on the 13th of November. The board will propose for the EGM that Peter Olsson be elected to the board. If elected, Peter would replace Dominique Belloin on the board.

• 11-13: Peter Olsson was elected to the Board of Directors of Katalysen Ventures, replacing Dominik Belloin.

Letter from CEO Peter Almberg

The landscape for venture investments has presented significant challenges since Q3 2021, marked by a contraction in available funding, rising interest rates, and destabilizing geopolitical events. The early-stage investment segment as a whole is being tested, which is evident not only in our share price, but also in the market valuations of our publicly listed peers. 

However, it is crucial to acknowledge the cyclical nature inherent in markets, destined to rebound at some point. Despite our hopes for a market upswing post-summer 2023, this optimistic outlook has yet to materialize. Through our interactions with both investors and entrepreneurs, a prevailing sentiment suggests that the market might be approaching a stage of "final capitulation." This phase typically marks the culmination of despondency, establishing a foundational price level from which the likelihood of appreciation becomes more probable.

Nasdaq First North Index All Share saw a tripling in value from 2015 to 2020 and a doubling from 2020 to 2022, before retracting by approximately 65%. The current capitulatory phase is anticipated to severely test the resilience of early-stage ventures, potentially resulting in numerous exits. Consequently, once the inevitable upswing occurs, capital will be funneled into a fewer but more robust set of companies. This supply-demand imbalance could create a squeeze effect, catalyzing a price recovery for those who survived. In Katalysen Ventures’ IPO memorandum, we published a growth target that we think is appropriate for a venture developer, given the characteristics of the model and previous performance data: 35% annual growth in portfolio value. We still believe this target to be obtainable, over a full economic cycle. 

So, how are our portfolio ventures doing in this harsh environment? We have always promoted a venture-centric approach (as opposed to an investor-centric one). In line with this ethos, we exercise caution when disclosing detailed information about our portfolio companies to avoid setting unrealistic expectations among investors interested in our portfolio companies. 

Moving forward, we intend to strike a balanced approach, offering more insight into individual portfolio ventures, while maintaining a level of discretion that preserves the integrity and operational focus of the businesses we back. For now, we can summarize our expectatioons on the potential of the holistic portfolio as follows:

Expected development over next two years	Negative  (0X-1X)	Positive (1.5X-2X)	Very positive  (2X+)
Number of companies in segment	8	10	7
Segment total value in current portfolio	15%	35%	50%

In 2023, we have strengthened our positioning ahead of a market upturn: we have invested expertise and time to increase our stakes in the portfolio ventures that we believe hold the most potential over the next 30 months, and we have significantly reduced our operating expenses. We continue to evaluate possible further actions within both these themes (increasing important holdings through expertise, reducing costs), and decisions have been taken after the end of the Q3 period that will result in a further approximate 35% reduction in operating costs starting Q1 2024. We will keep you updated as these changes are implemented.

Despite our ability to conduct “pure” expertise investments into the portfolio, cash continues to be a scarce resource since not every challenge can be solved through hard work alone. Additionally, we need to maintain our own runway until market confidence returns and given the low price at which the share is traded, we believe smaller funding events (while not ideal) to be the better way forward for the company’s shareholders. The issuance of warrants after the Q3 period is an example of such a funding event. 

Cash is a challenge that we can confidently handle, partly thanks to the excellent long-term support from our larger strategic shareholders. On behalf of Katalysen, I would also like to thank the many entrepreneurs in our portfolio, who are doing a great job, sweating as much as we are! We remain confident that this hard work will pay off and believe the present moment to be and excellent time to invest in well positioned early-stage venture developers and venture studios given the immense opportunities that await on the other side of the market cycle. 

This disclosure contains information that Katalysen Ventures AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 21-11-2023 08:44 CET.