Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Bloc Ventures: Demand For Deep Tech Unhindered By Downturn

Published 26/07/2022, 13:17

Following the exits of Marmalade and EVRYTHNG in 2021, Bloc’s FY21 NAV/share rose 7% y-o-y to £25.30. Bloc has now delivered an FY18–21 NAV/share CAGR of 19% and a portfolio IRR of 25% since inception. In Q122, incorporating a successful Series A round for Pharrowtech, NAV/share rose a further 9% to £27.51. In FY21, Bloc strengthened its team and processes with new hires. In FY22, management is raising a Series B extension round, having postponed a larger Series C funding round until market conditions improve. Despite challenging markets, management is able to identify a number of potential portfolio up-rounds that it believes could lead to growth in FY22 NAV/share of over 30% y-o-y.

FY21 results: £6.8m cash at year-end

Bloc reported FY21 net asset value (NAV) per share of £25.30, up 7% y-o-y. This included the exits from Marmalade and EVRYTHNG, as well as up-rounds for YellowDog and Yordex, offset by the write-down for Tether Technology. Bloc made three new investments, Mindtrace, Shield-IoT, and Helix Geospace, maintaining its active portfolio at 10 companies. Following £9.3m of initial cash consideration from the sale of Marmalade (with multi-year earn-outs still to come), the group held cash of £6.8m at 31 December 2021.

Deep tech, a defensive B2B proposition

Technology has become increasingly indispensable as an enabler of cost reduction and productivity increases. The deep tech sector, in particular, incorporates a broad selection of long-term, IP-based businesses operating B2B models. These are high-growth businesses seeking either to create new markets or to disrupt existing markets, with corporate demand likely to prove more resilient in a downturn than more speculative B2C models, reliant on weakening retail demand.

Fund-raising at an attractive investment price

Given current market sentiment, Bloc has decided to focus its own fund-raising efforts on a smaller round at the previous round valuation from a core investor group, including new and existing investors. The share price premium has been brought into line with the market, despite the early stage and resilient nature of the portfolio. The funds will allow Bloc to continue to invest in new and existing companies into 2023, postponing a full Series C round until market conditions improve and investor appetite returns. Given likely future up-rounds, management anticipates that the discount to its expected FY22 NAV will fall to 0.78x by year-end, underpinning a future funding round.

Valuation: High-growth and maturing portfolio

Bloc can point to a strong track record, with an FY18–21 NAV per share CAGR of 19% and a targeted annual return of 20%+, underpinned by strong secular and technology sector trends. Its portfolio continues to offer the prospect of further up-rounds in FY22. With a clear sector focus, a structured investment process, and an early-stage portfolio with high growth potential, despite worsening market conditions, Bloc remains an attractive investment opportunity for the medium term.

Portfolio companies

AccelerComm – wireless channel coding

Crypta Labs – quantum encryption

Helix Geospace – advanced precision antennas

Mindtrace – AI image processing

Paytia – cloud-based payment security

Pharrowtech – ultra-high bandwidth wireless

Shield-IoT – security for mass-scale IoT

YellowDog – commercial cloud supercomputing

Yordex – enterprise spend management

Zeetta Networks – enterprise private networks

Business description

Bloc Ventures is a London-based venture capital company, active in early-stage seed+ and series A investment in the deep tech segments of the UK and European markets. Bloc has built a portfolio of 10 investee companies focused primarily on cloud, data science, connectivity, and security for telecoms and computing applications.

Click on the PDF below to read the full report:

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.