Portfolio Update

Forward Partners Group PLC

24 July 2023

 

 Forward Partners Group plc

("Forward Partners" or "the Company")

Portfolio Update

Forward Partners Group plc (LSE: FWD), the London-based investment firm specialising in supporting high-growth, early-stage technology businesses, announces an update on its portfolio and its exposure to the fast-growing AI sector.

●	New investment: £0.5m deployed into an AI platform as part of its £2.4m seed round.
●	52% of companies by Fair Value in Forward's portfolio classified as AI.
●	£2.3m write-down of Koyo as noted in Forward's FY22 results, further to the transfer of its existing loan book to a new service provider and winding down of the company.
●	Good portfolio momentum and strong deal flow, particularly from early-stage companies leveraging generative AI.

New AI investment

Forward invested £0.5m into an AI platform as part of its £2.4m seed round, alongside other investors. The funding round is awaiting a second close, and the company name will be announced shortly after completion.

The initial market for this new addition to Forward's portfolio is predictive analytics for industrial machinery. The company uses a branch of AI known as 'federated learning' that preserves privacy by training AI learning models on-premises rather than in the cloud. Its technology helps manufacturing companies improve production line productivity by increasing uptime and yield.

The company addresses a rapidly growing market for AI-enabled industrial machinery expected to be worth $89bn by 2024 and $130bn by 2030. Its portfolio of active clients and substantial annual recurring revenue within its initial market are strong positive indicators of the company's potential to build a very significant business in the wider Internet-of-Things and AI sectors.

AI opportunities

Recent advancements in generative AI technology have created the potential for whole new product categories and paved the way for early-stage companies to develop products faster and more efficiently. Our deal flow has been transformed and we are seeing fast adoption within our portfolio. Forward's portfolio includes 20 businesses now classified as AI*.

Recent news from the portfolio includes:

●	Baselime (https://baselime.io), a DevOps platform that helps engineering teams to build serverless applications faster, announced the launch of Baselime AI, a new integration with OpenAI aimed at simplifying debugging for developers.
●	Sonrai (https://sonraianalytics.com), an AI platform for medical research and development, recently announced a strategic partnership with Alliance Care Technologies (ACT). The deal will enable the deployment of Sonrai's proprietary AI technology in the UAE's healthcare system to enhance cancer detection and biomarker discovery.
●	Sourcery (https://sourcery.ai), a coding assistant for Python, recently launched Merlin, its new AI pair-programming coding assistant, designed to support developers throughout the coding process.

Koyo write-down

As outlined in Forward's full-year results, in 2022, AI-powered lending platform Koyo Loans experienced difficulties raising new capital amid the prevailing economic uncertainty and initiated a consultation process. The outcome of this process has led Koyo to transfer its existing loan book to a new service provider and to initiate a wind-down of the company. For Forward, this is expected to result in a £2.3m write-down in Fair Value at the interim date.

Regrettable as they always are, write-downs are expected within a venture capital portfolio that is constructed to generate returns of 10x or more from its best investments. The majority of companies in Forward's portfolio remain in good health, with lean, capital-efficient business models, good cash runways and high growth potential.

Portfolio momentum at AI-driven companies

Apexx Global (https://apexx.global), an AI-driven payments orchestration platform, announced the successful completion of a $25m series B funding round in March 2023. Forward participated in the round investing a further £0.7m taking the Company's total investment to £2.3m. The company, whose clients include CarTrawler, Ryanair, Avon Cosmetics and XE.Com, will use the funds to expand its North American operations.

PocDoc (https://www.mypocdoc.co.uk), an app-based digital health platform which uses AI to power home blood tests, announced a successful fundraise of £2.4m in March 2023, adding to its Seed round and bringing the total investment raised at seed stage to £5m. The extension round was led by PocDoc's existing investors, Forward Partners and MMC Ventures. Forward participated in the round, investing £0.3m taking its total investment to £1.6m. PocDoc recently launched in 4 major pharmacy chains, providing access to over 300 locations nationwide.

Nic Brisbourne, CEO said: "Generative AI is unleashing a wave of value creation and company creation that rivals the early days of the internet, making this a very exciting time to be in venture capital. The potential for productivity gains across a wide range of roles and industries is just immense.

Forward offers exposure to companies at the forefront of AI developments through a portfolio of startup investments chosen for the strength of their fundamentals. We have experienced multiple waves of technology innovation and know how to spot the companies with the potential for enduring value creation. Key to our approach is building a detailed understanding of how and why products will get used and bought, how they apply AI and how companies will flourish alongside the larger players and platforms in the industry. Our strategy is to invest in application layer opportunities which create initial traction and build defensibility through a deep understanding of their customers and deep integration into their workflows.

As with any new technology, and indeed any new tools for innovation, AI can be used for bad as well as good. Our view is that AI will enrich our lives whilst also driving economic growth through productivity gains, and the risks should be managed through measured regulation. We also believe that Artificial General Intelligence is sufficiently far away that fears of what it might bring shouldn't get in the way of the benefits on offer from AI in the immediate future."

NOTES

* Previously the Company categorised its portfolio as 'Applied AI', 'Marketplaces', 'eCommerce' and 'Other' according to their primary line of business. However, many of the companies classified as 'Marketplaces', 'eCommerce' and 'Other' make extensive use of AI in their products and after feedback from investors, reporting will now simply specify the percentage of the portfolio that offers AI exposure, defined as businesses that are either applying AI or have a generative AI product in market or near launch.

This 'AI exposure' metric covers 52% of the portfolio as of today. The increase from the 40% of the portfolio categorised as 'Applied AI' reported in Forward's 2022 results is partly due to the inclusion of companies previously held in other categories and partly because AI companies are growing more rapidly than other companies in the portfolio.  

ENDS

Enquiries

Forward Partners Group plc	Via Alma PR
Nic Brisbourne, CEO
Lloyd Smith, CFO and Company Secretary
Liberum Capital Limited	Tel: [phone]
(Nominated Adviser and Broker)
Chris Clarke
Lauren Kettle
Cara Murphy
Alma PR	Email: [e-mail]
(Financial PR Adviser)	Tel: [phone]
David Ison
Andy Bryant
Will Ellis Hancock

About Forward Partners

Founded in 2013, Forward Partners is an established and respected London-based venture capital firm, specialising in supporting high growth, early-stage technology businesses in the UK. It holds a ten-year track record of making venture capital investments and receives over 4,000 start-up funding applications every year.

The Group brings together venture capital with highly specialised growth support from Forward's Studio. This model supports founders to build stronger businesses faster to provide better outcomes for companies and investors alike.

The management team brings together highly experienced venture capitalists, entrepreneurs, and expert consultants. Since 2015, Forward Partners has been backed by BlackRock, one of the largest institutional investors in the world.

For more information and insights into Forward's portfolio, subscribe to Forward's email newsletter 'Forward Thinking' or visit www.forwardpartners.com.

 

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