Touch Ventures, the ASX-listed VC fund initially backed by BNPL fintech Afterpay, lost $15.4 million in 2023, writing off more than $27 million worth of investments in PlanPay and Till Payments.
The upside for the VC (ASX:TVL) is that last year’s red ink is a quarter of 2022’s net loss of $65.2m. But as one of only two publicly listed VC funds, the results offer some insight into the struggles of a VC fund that doesn’t have a large slice of Canva to prop up its balance sheet.
Shares in Touch have bounced around the 0.075 cents mark for the past week since the results were released – a far cry from then Afterpay-backed fund made its ASX debut in 2021 having raised $100 million at 40 cents a share.
The net asset position at 31 December 2023 was $108.9m, including cash of $58.2m, a fall of around 54% in net asset value on the previous year.
Touch’s total market cap ended 2023 at $49.3m.
It’s $19.1m worth of early-stage investments is now a portfolio valued at $4.4m.
Last month Afterpay’s parent company, Block, offloaded its 19.99% stake in Touch, with Gannet Capital acquiring most of the holding to take a 17.81% interest in TVL, and founder Glenn Poswell joining the board.
Till Payments is an Icarus-like fintech tale since its founding in 2012.
Touch initially led a $15 million top up round for Till in late 2021, just two months after $110 million in a Series C. The fintech raised an additional $70 million last March after shedding 40% of its staff. Weeks later founder Shadi Haddad departed as CEO amid a board shakeup. A long-mooted IPO, including a Nasdaq listing in late 2023, never materialised. Instead the fintech, once valued at $500 million, was acquired by listed Canadian payments processor Nuvei in late 2023 for just US$30 million (A$46m).
Having raised $230 million, the M&A deal left a number of prominent early stage investors with holes in their pockets, including Touch, which put it $5m – valued at $1.2m in 2022 – but received nothing from the sale.
Travel BNPL PlanPay, founded as Play Travel by Andrew Paykel, was a bigger and more fraught loss.
It was Touch’s first investment, back when it was called AP Ventures, just before the pandemic cruelled the startup’s ambitions.
PlanPay relaunched in early 2023. In total Touch invested $17.2m, topped up by a $5.1m loan. They were worth $12m and $2.1m respectively in 2022, but last year the funding tap was turned off, the entire $22.3 million investment was wiped.
Touch Ventures CEO Hein Vogel said in the annual report that it was “a challenging decision”.
“Over the past 18 months, we supported PlanPay and its CEO as they rebuilt its enterprise travel product. Despite these efforts, PlanPay struggled to meet its revenue expectations and customer targets,” he wrote.
“As a result, Touch Ventures decided not to provide additional funding to PlanPay in September 2023 and has written down its investment in PlanPay to nil.”
There was better news from the sale of open banking fintech Basiq to payments giant Cuscal last March. Having tipped in nearly $10m, the sale has delivered $14.1 million so far, with another $800,000 in escrow.
“Including the escrowed amount, the sale represents a 50% return on invested capital of $9.95 million and an IRR (internal rate of return) of 19.7%,” Vogel said.
Touch also made $4m worth of investments across three companies in 2023. Courier venture Sendle and shopping deals site Wrapd both scored $500,000 in follow-on funding.
Sendle scored a net revaluation uplift of $600,000 as a result, with the stake valued at $15.9m, after Touch poured in $36.5 million since 2021. Touch wrote down its holding in 2022.
Meanwhile hospitality order platform Ordermentum joined the portfolio following a $3m equity investment as part of a funding deal to acquire produce marketplace Foodbomb.
Vogel said they’re “more optimistic” about 2024 and eager to deploy capital.
“We believe that many companies who have held out raising capital or extended their runway will look to capitalise on these more stable conditions to accelerate their strategies,” he said.
“We are fortunate to be an investor with existing capital, in market and able to execute on deals. Our focus this year will be to look for new opportunities as we look to allocate the bulk of our $58.2m of cash into new investments under our revised investment strategy.”
Touch will look for more mature businesses with market traction and revenues of $5m-plus, with a target investment size between $3m and $10m spanning retail innovation, e-commerce enablement, fintech, consumer, B2B software and data.
Trending
Daily startup news and insights, delivered to your inbox.