Molten Ventures, a British investor, has significantly reduced the valuation of its stake in Thought Machine, a London-based fintech firm, indicating a remarkable decline of around $1 billion in value.
- The company’s valuation fell by nearly 40% from March to September 2024, impacting its return on investment multiple.
- Thought Machine’s IPO ambitions may face hurdles due to the valuation cut, despite founder Paul Taylor’s strong interest in a London listing.
- The valuation drop was attributed to unsigned customer contracts, although Molten Ventures remains optimistic about future growth.
- Thought Machine, valued at $2.7 billion in May 2022, shows potential to reshape the traditional banking sector despite current challenges.
Molten Ventures, a prominent British investor, has announced a substantial reduction in the estimated value of its stake in the London fintech company, Thought Machine. This adjustment reflects a dramatic $1 billion decline in the company’s valuation. Their venture arm, Molten Ventures VCT, reported that the share value of Thought Machine plummeted by almost 40% between March and September 2024, now estimated at £5.9 million.
The decline in valuation has implications on Thought Machine’s return on investments, decreasing the multiple from 4x to 2.5x if the investor decided to exit today. The firm noted this reduction is part of a broader trend of valuation decreases among companies with strong prospects but affected by declining market multiples. Despite these setbacks, Thought Machine had previously expressed ambitious plans for a London IPO. Founder Paul Taylor affirmed these intentions, highlighting, “London is our home… we’d be very keen to list in London,” while acknowledging investor influence in final decisions. There’s a visible contrast, though, with many UK firms opting for US listings, driven by market momentum there.
The setback in Thought Machine’s valuation does not entirely quell the company’s growth potential. Molten Ventures pointed out that the drop coincided with customer contracts that had not yet been signed or implemented by the valuation date. However, the investor expressed ongoing belief in the company’s future value, anticipating significant growth as new customer engagements are activated and significant accounts are launched. Thought Machine’s trajectory suggests a transformative impact on the traditional banking sector’s technological infrastructure.
Having reached a valuation of $2.7 billion by May 2022, following a $160 million funding round which included investment from Morgan Stanley, Thought Machine demonstrates a resilient market presence. While current obstacles pose a challenge, the company’s underlying promise of growth remains intact. Molten Ventures articulated their optimism, not only in the fintech’s capacity to acquire new clientele but also in its ability to revolutionize banking technology.
Despite current setbacks, Thought Machine’s potential to innovate in the banking sector remains promising.
