Anything that remains in the PVL VC portfolio from pre-2021 (pre-Kruger) has been through a long Winter (3-6 years) and therefore the chances of these companies surviving and thriving (increases to NTA) are now quite reasonable — that's venture capital investing 101.
From the initial portfolio (2016 to 2021), these are the winners that remain alive, well and growing: 1) Cirrus Materials Science (~A$26m valuation), 2) Ferronova (~A$6m valuation), 3) Inhibit Coatings (~A$4m valuation) and Certusbio (~A$3m valuation)
- Cirrus Materials Science (~A$26m valuation)
- PVL initially invested $150K NZD in 2017 ($1/share) (pre-seed round)
- PVL owns ~6.7% of the company worth ~$1.75m AUD
- Cirrus completed a Seed round in 2019 ($4/share)
- This was followed by a Series A in 2022 raising $6m ($10/share) (PVL did a follow-on investment here of $400K NZD)
- PVL's initial investment has thus 10-bagged so far
- Current clients include: US DoD, US DoE, aerospace majors, leading EV makers, superconductor makers
- Cirrus has made really good progress in levelling up their TRL
- They are very efficient capital allocators
- Cirrus offers exclusivity in the customer’s field-of-use, making the technology highly attractive and disruptive.
- Cirrus is likely to be currently looking for a strategic investor (also serving as a key customer)
- In addition, they will look to move from trial-style revenue to proper commercial licenses (in the next 12-month timeframe)
- If we look to 2023 (next 12 months), it would be reasonable to assume that if they hit the milestones they are looking for, we could see a re-rate (Series B).
- Cirrus has the potential to generate revenue in a multitude of industries: semiconductors, car manufacturing, wind turbines, space tech etc., so they can keep carving out commercial licenses for companies where they are commercial benefits (often in the order of millions or tens of millions of dollars of savings for their customers)
- Could this become a unicorn? That's anyone's guess, but the TAM for high-performance coatings is estimated to reach US$200 billion by 2025 (Source: Research & Markets, 2017)
- I'd like them to hit a $50m+ valuation at Series B and $100m+ valuation at Series C
- Ferronova (~A$6m valuation)
- PVL initially invested in May 2016 and owns ~12.6% of the company, which is currently worth around $760K AUD
- Ferronova subsequently raised a Series A in May 2020 raising ~$3.5m
- Uniseed is a substantial investor and also has a board seat
- This is essentially a biotech company going through the drug development pathway (clinical trials)
- Based on the recent announcement(s) and their clinical trial timelines I believe Ferronova are underway with a current financing round...
- Biotech companies often have a binary style outcome associated with them, but Ferronova appears significantly de-risked since the first PVL investment back in 2016 and now have multiple drugs going through clinical trials
- Their TRL is probably around the mid-point (4/5/6) and inching now towards the 7/8/9 levels where it can be commercialised
- Following the current financing round (which will give them a runway), there would be a circa 2-year period of progressing through the next phase of regulatory/clinical trials (Phase II)
- At that point, if Ferronova can succeed with the Phase II trials (over the next 2 years), we could see a big re-rate scenario moving into Phase III trials (2025).
- The uplift for Ferronova is likely to be small for the impending/current financing round but could be very significant if all continues well in ~2 years' time (i.e. I have seen anything from $40m to $400m+ valuations for phase III biotech companies on the ASX and Ferronova operates in a massive TAM)
- Inhibit Coatings (~A$4m valuation)
- PVL initially invested many years ago and owns ~17.5% of the company, worth around A$670K
- This is another materials company, but with a more specialised application than Cirrus (thus Cirrus has a much larger TAM opportunity)
- They are starting to get "paid to play" style engagements but are less progressed than Cirrus
- They are dealing with substantial players in the industry
- I think they are largely through the valley of death stage and suspect they have recently extended their runway
- It would be reasonable to assume they would be looking to do a Series A mid-next year following their Venture Round in July 2021 where shareholders would/could see a value uplift
- I'm feeling confident about the prospects of this company. I'd like to see a Series A take them to a $10m+ valuation (from ~$4m currently) next year based on an estimate that their TAM/rev opportunity is around 30% the size of Cirrus
- Certusbio (~A$3m valuation)
- PVL initially invested in 2015 and owns ~19% of the company, worth around A$520K
- Certusbio did a Series A in Sept 2021, raising $4.6m
- However, based on announcements, it appears that they recently ran out of cash and had to do a very discounted (but small) con note, thus the currently discounted valuation.
- If they can get commercial traction (a condition of their Series A), I would imagine the valuation would re-lift to Series A levels again.
- It is unlikely they would go back for a priced round now for another 12-18 months now IMO, but I am feeling confident they have the runway to take them to a Series B (which might be a nice but not overly significant uplift in valuation given the size of the prize for this company is lower).
All in all, I think the upside potential of these 4 companies is very material, particularly 1 & 2, and it appears that all 4 of these have now crossed the valley of death. These are the 4 winners that have emerged from the Pre-Kruger era and now we await how these companies will perform in 2023, coupled with the outcomes of the recent Kruger portfolio additions (Urbix, Liquid Instruments, Quantum Brilliance, Courseloop, SkyKraft, Firmus Grid, Neuroflex, and Flomatrix)...
