SuperSeed Capital (WWW.AQSE)
Full Year Results
US Acquirers Sees Two Fund Holdings Exit
SuperSeed Capital Limited (“SuperSeed”) is a registered, closed-ended, collective investment scheme that invests in seed-stage B2B Software as a Service (SaaS)/AI companies, primarily through funds managed by SuperSeed Ventures LLP. The Company’s principal investment to date in SuperSeed II LP (the “Fund”). The Company has today reported its Q4 2023 and Full Year to December end 2023 (FY 2023) results. During the year, two investee companies, Techsembly and Garvis, in which SuperSeed first invested in Q2 2021 and Q3 2022 respectively, saw sales grow strongly. This attracted US acquirers Sabre Corporation (NASDAQ: SABR) and Logility Inc., respectively. SuperSeed targets holding investments for three to seven years. However, in a short holding period, SuperSeed has achieved a 78% combined IRR from Techsembly and Garvis. This is an excellent result evidencing SuperSeed’s ability to identify and access high quality early-stage technology companies, work closely with them to achieve commercial scale and exit at a high IRR.
FY 2023 15% NAV Growth
In Q2 2023, SaaS Annualised Recurring Revenue (ARR) produced by portfolio companies rose by 21% (vs. Q1 2023). In Q3 2023, the ARR growth rate slowed to 9% as business buyers became more cautious. In Q4 2023, ARR recovered seeing a 13% increase reflecting strong commercial progress. Looking to the Fund, FY 2023 P&L revenue of £222k unrealised and £297k realised gain on investments, £3k of other income and £151k of costs, produced a profit of £372k and EPS of 15.8p. During 2023, a combination of investee company SaaS growth and the two exits achieved saw the overall NAV rise by 15% to 113p per share vs. a current share price of 85p. During Q4 2023, £0.3m was invested in new companies.
New Investments
During Q4 2023, the Fund invested in Hirundo Ai Ltd which enables AI-driven businesses to debug and refine AI models. It also invested in Popp, an AI SaaS tool that enables large enterprises to automate the process of candidate selection and initial screening. A final investment during the period was into FreightCore, a UK-based fully automated freight forwarding platform. Post period end, SuperSeed led a £1.4m pre-seed investment round in Messium, which applies AI to hyperspectral satellite imagery and machine learning algorithms to optimise the application of fertiliser to wheat plants.
Recommendation
SuperSeed, trading on a 0.8x NAV/share multiple, invests in the growth technology sectors of B2B SaaS and AI. Its investee companies, given their growth, are being acquired and also attracting new investment at higher valuations. This reflects the fund quality and merits a premium to the sector 0.6x multiple. Buy