Report for the First Quarter 2022 in Katalysen Ventures

Summary of report below. Full report available under Investor Relations on Katalysen.com.
All figures currencies in SEK unless otherwise specified.

Venture development KPIs:

• New clients during the period: 4
• Active clients at the end of the period: 11
• Total calculated market value of Katalysen’s portfolio of shares and options at the end of the period: 195 MSEK
• Quarterly portfolio growth excluding new cash invested during the period: 5.6%
• Value added to the portfolio from new shares and options obtained via non-cash investments during the period:
  5.4 MSEK

Traditional financial KPIs (2022-01-01 to 2022-03-31):

• Net sales: 632 000
• Profit after financial items: -3 150 000
• Balance sheet total: 90 073 000
• Solidity: 97.2%
• Earnings per share: -0.62
• Number of outstanding shares: 5 081 865

Important events during the period:

• 2022-01-10: Anna Koponen joined Katalysen as Venture Lead. In this role, Anna works hands-on with our ventures, leading projects that support their growth. Prior to joining Katalysen, Anna was Head of Marketing and Communications at a Finnish VC firm Innovestor.
• 2022-01-17: Katalysen announced new client agreement with smart-ventilation leader Skawen.
• 2022-01-25: Katalysen held an extraordinary general
• meeting (EGM) of shareholders. The EGM decided to change the name from Katalysen & Partners AB (publ) to Katalysen Ventures AB (publ). Three new, independent members were also elected to the Katalysen board: Ann-Sophie Hesser, Dominik Belloin, and Aline Reichenberg Gustafsson. The new board consists of six members (including Thomas Liljeton, Heinrich Weber, and Peter Almberg), four of which are independent.
• 2022-02-24: Katalysen announced a new brand and a new website, developed to form the backbone of future strategic marketing efforts.
• 2022-03-14: Katalysen announced the successful closure of a private placement, amounting to 8.9 MSEK in total, subscribed for by 9 professional investors. It was noted that the private placement was oversubscribed.
• 2022-03-15: Katalysen announced that the founder of leading financial services firm C-Quadrat Investment Group, Alexander Schütz, was one of the professional investors participating in the private placement.
• 2022-03-23: The board of Katalysen formally decided to proceed with the IPO, and to approve the memorandum that had been prepared for the IPO.
• 2022-03-24: Katalysen received formal approval for listing on Spotlight Stock Market, and published the IPO memorandum. From this point on, Katalysen was subject to MAR, and Cision became Katalysen’s primary channel for formal communications.
• 2022-03-25: The subscription period in Katalysen’s IPO commenced.
• 2022-03-29: Katalysen announced new venture development partnership with Med4Cast to promote the use of AI in medical diagnostics.
• 2022-03-29: Katalysen announced that the transaction cost in the IPO would be lower than previously communicated.
• No date: It was noted that an additional venture in Katalysen Ventures’ portfolio signed an agreement with an investment bank during the period to pursue a Series-A.

Important events after the period:

• 2022-04-01: Katalysen announced a new Europe-India partnership with Tetrad Capital Partners to help Indian SaaS-ventures with EU market entry. The IPO memorandum was updated accordingly.
• 2022-04-05: Katalysen announced signed subscription commitments in the ongoing IPO listing issue. The subscription commitments were signed by two large institutional investors. The IPO memorandum was updated accordingly.
• 2022-04-10: The subscription period in Katalysen’s IPO closed.
• 2022-04-12: Allocation of shares subscribed for in the IPO was finalized. It was noted that the IPO had been oversubscribed.
• 2022-04-12: Katalysen Ventures announced its annual general meeting of the shareholders, to be held on 2022-05-12.
• 2022-04-20: Trade commenced in the Katalysen (”KAV”) share on Spotlight Stock Market.
• 2022-04-22: Katalysen portfolio venture iReality announced formal partnership with DataArt to create real-time tracking system for horse racing.
• 2022-04-25: Robin Dagdeviren joined Katalysen as Venture Lead. In this role, Robin works hands-on with our ventures, leading projects that support their growth
• 2022-04-26: Katalysen Ventures announced the completed incorporation of USA-based Katalysen Ventures Inc.
• 2022-04-27: Katalysen portfolio venture Skawen announced ramped up European expansion following a successfully closed funding round.
• 2022-05-05: Katalysen announced increased stake in wealth management SaaS provider Sharpfin.
• 2022-05-12: Katalysen held its 2022 Annual General Meeting of the shareholders (AGM). The AGM decided, among other things, to re-elect the board, to update the company’s articles of association to better reflect best practices, and to authorize the board to issue shares and warrants. An AGM communiqué was published the following day.

Management report:

Bull or bear, a good venture developer can always create value

As we write this, we have the privilege of knowing more than we did at the end of March. Since Q1 came to an end,  Katalysen has become a listed company, our team has been further strengthened, we have adapted a new set of goals for the rest of 2022, and global markets have taken a definitive turn for the worse in the wake of inflation, the ongoing pandemic and the tragedy unfolding in Ukraine.

For many younger people, this may be the first time in their professional lives that they actually experience a market deep in the red. For those of us who have been around a bit longer (a mixed blessing!) we recognize this long-term market behaviour, and also know that “winners” can be created in bull- as well as bear-markets. The key is to (1) remain agile and opportunistic, to (2) keep your finances in good order, and to (3) plan long-term. Also, importantly, to (4) surround yourself with genuinely skilled people who are motivated to go that extra mile when circumstances require (such as these).

(1) It can be argued that the value of a good venture developer is higher in times such as these. Our work has always revolved around solving problems, to remove obstacles between ideas, implementation, and results. This almost always requires solutions that are rational, and based on real-world conditions. We dare to claim that we are good at solving problems, and in a world where problems are seemingly becoming more by the day, both micro and macro, an opportunistic venture developer can create a lot of value for clients and itself.

However, and importantly, being opportunistic is not an excuse to be rash. We like to tackle challenges step-by-step, to let things grow organically. A little bit slower often means a little bit more sustainable. One must strike a balance and respect the fact that lower valuations and less access to venture capital provides both opportunities and challenges for us and our portfolio.

(2) Keeping one’s house in order is always valuable, but perhaps more so in times such as these. While we have noted that the venture developer model provides opportunities in both bull- and bear-markets, we can also note that Katalysen has a low exposure towards increasing interest rates. This is because we obtain leverage in our investments via our options-model, not by borrowing funds that we in-turn invest. It is also worth noting that borrowing funds is not how our portfolio is funded. This quarter, we have also moved away completely from more theoretical valuation methods, to instead only use “Last Paid Price” and  ”Berkus-Scorecards” to value the portfolio. This move was begun in Q4 2021, and is now completed with approximately 80% of the portfolio being valued with “Last Paid Price” at the end of Q1 2022. An added benefit of this move is that it makes our operations easier to understand for retail investors who want exposure towards the often hard-to-access early-stage segment.

(3) This spring we sat down with eight of our venture developers in Stockholm to reflect on our goals for the rest of 2022, and how to best achieve them. Central to this discussion was to “keep our eyes on the prize”. In our case, the prize is for Katalysen to create and extract more value that can be returned to shareholders and/or be reinvested in more ventures.

Much work was done during 2021 and the first quarter of 2022 when it comes to building the long-term infrastructure that will help Katalysen thrive in the long run. This work was concentrated on 1) strengthening the brand 2) ensuring we can sign more lucrative client agreements, and 3) sharpening our venture developer skills. As a result, we feel confident that we have proven the value of our model towards early-stage ventures, as is evident in the influx of new client agreements from both new and returning ventures during Q1. 

However, much work remains to be done (see figure 2 on the next page for a brief summary of our focus areas for the rest of 2022). We must leverage our brand to ensure that the majority of early-stage ventures and early-stage investors in Sweden are aware of Katalysen Ventures. As a listed company, we have a fantastic opportunity to present Katalysen as the best way to gain a diversified exposure to the early-stage segment and additionally with an optimized risk reward profile. Anna Koponen, previously Head of Marketing and Communications at a Finnish VC firm Innovestor, will lead this effort.

For the rest of 2022 we will also undertake several efforts to become an ever better venture developer, including leveraging our newly formed bridges to the US and India, involving our world-class advisors more closely in the venture development work, launching a new creative offering, and establishing a dedicated team to help manage Co-Investment opportunities in our network. 

Finally, we are determined on providing an irrefutable proof of the value we can extract from our activity. We will do this by partially exiting one or several of our portfolio assets. Taken together, we are confident that we will be able to confidently claim to be Sweden’s leading venture developer by the end of the year, and to be able to demonstrate the value creation for our shareholders, venture clients and co-investors alike.

(4) The fact that we obtain such strong returns on our expertise means that it is exceptionally rational for a venture developer like Katalysen to carefully build and nurture the team. It is important for us to continuously work on the company’s environment and spirit so that we can attract and keep top-talent.

While we are optimistic about the future, one should remember that we are currently witnessing market trends that haven’t been seen since the early 90s. The two largest positions in our portfolio are the B2B payments platform Payer and hybrid event platform InvitePeople. Both of these ventures are currently in the process of planning larger, future funding rounds with investment banks. These processes will, however, as a result of the current market situation take longer than originally estimated. We do expect these future transactions to take place at valuations that are at least 2X those at the end of Q1.

How do we see the future, what is our vision? We foresee the economic landscape evolving into a structure of competing clusters of collaborating companies. We believe that smaller companies can adapt faster and will therefore take terrain from the large incumbents. We foresee a massive generational shift in the economy that favours agile, innovative and execution focussed players, of which the early-stage company is an important part. Consequently, we will experience an ever-growing importance of the early-stage company. We also see a happier world, because people in general are happier working for smaller companies, where corporate politics are irrelevant, but creativity, inclusiveness, and diversity prime and where people’s individual contribution count.

Katalysen’s mission is to help early-stage companies to find their strengths, build on them, improve their execution capabilities and to become attractive investment opportunities. Katalysen sees its mission to be a guide for early-stage companies through the valley of despair to the break-through and take-off. And because value is created fastest at the beginning of the life of a company, Katalysen will be able to create massive value for its shareholders by its unique business model that keeps a part of the upside of the companies we work with. And, contributing as a venture developer to our vision of a new agile economy where the early-stage company has more influence, we strive to make the world a better place.

Yours Sincerely,

Peter Almberg & Heiner Weber

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 17-05-2022 13:20 CET.