Molten Ventures has cut the estimated value of its stake in London fintech Thought Machine by nearly 40%.

In its half-year results, the British investor’s listed venture arm, Molten Ventures VCT plc, today said its shares in the London fintech had fallen in value by £3.8m between March and September 2024 to £5.9m.

That would imply the company’s return on investment multiple has dropped from 4x to 2.5x if it were to exit its stake today. Based on Thought Machine’s publicly-stated valuation in its last funding round, it could suggest a drop in value of more than $1bn.

“Valuation reductions have been recorded in some companies with sound prospects where market valuation multiples have declined,” the firm said.

A spokesperson told UKTN: “Although Thought Machine has confirmed contracts, there is currently a timing delay to when the customer contracts are live and when the revenue is recognised.

“We, Molten, remain optimistic on growth of the business and view it as a market leader to transform the banking tech stack sector.”

The cut could come as a blow to Thought Machine’s IPO ambitions, with the fintech talking up the prospect of a London listing as recently as September.

Founder Paul Taylor told City AM Thought Machine was “definitely going to IPO” and gave his clearest public indication yet that the capital is management’s preferred destination.

“London is our home, and all other things being equal, we’d be very keen to list in London,” Taylor, a former Google executive, said.

“But it’s not just a decision that only I can take – our existing investors would have a strong voice in that,” he continued, adding that many other UK companies have ultimately opted to float in the US. “There’s a lot of momentum behind New York.”

Thought Machine’s valuation hit $2.7bn in May 2022 after a $160m funding round featuring institutional investor Morgan Stanley.

In its interim report published last month, Molten Ventures plc — a separate listed vehicle to Molten Ventures VCT plc which also has shares in Thought Machine — put the valuation cut down to customer contracts that had not yet been signed, adding it still believed in the company’s growth potential.

“Our valuation of Thought Machine has decreased…This reflects the timing of implementing confirmed customer contracts which had not gone live at the valuation date,” Molten Ventures said.

“Our belief in the upside future value in the business remains as they bring on new customers and look to go live with significant accounts. We remain optimistic about the broader growth potential of the business and its potential to transform the traditional banking sector tech stack.”

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