Investment trust Chrysalis believes high-growth tech start-ups will rebound over the coming months after a rough year so far.
The London-based firm, which counts unicorn Klarna and digital bank Starling among its portfolio, has seen its share price plummet 65 per cent since January.
High-growth tech start-ups have been adversely affected by rising interest rates and inflation, with Swedish-based payments company Klarna seeing its valuation fall 78 per cent alone in the second quarter.
UK-based tech start-ups have also seen stagnant growth. Despite more exits than ever before, 50 per cent of UK tech firms remain at stages of low growth, employment and investment and still require support to scale – particularly those working in deep tech, AI and quantum computing.
However, shares in leading tech companies have picked up since July and the tech-dominated Nasdaq 100 index has seen a 13 per cent increase in that time, leaving Chrysalis’s fund managers Richard Watts and Nick Williamson optimistic that the downward trend is finally turning a corner.
The investment firm has put further backing into its fintech portfolio companies Klarna, Starling and Featurespace as it participates in further funding rounds. Klarna raised $800m (£680m) in July at a valuation of $6.7bn (£5.7bn), down 85 per cent from the previous year.
“A re-rating of relevant listed peers, combined with strong revenue and earnings growth across the portfolio, should have positive implications for the value of [our] portfolio in forthcoming quarters,” Chrysalis was reported to have said by the Financial Times.
The portfolio has raised $1.4bn so far this year, yet 60 per cent of these companies are yet to turn a profit.
Chrysalis was set up to identify and fund potential unicorns, unlisted businesses seen as capable of growing into $1 billion-plus companies. It has raised £830m from outside investors since launching in 2018.