Tern TERN,) a company focused on value creation from Internet of Things technology businesses, reported its results for the year ending 31 December 2022.
Net assets were £24.9m, decreasing from £32.4m in the previous period and meaning net asset value per share declined to 6.4p. That, in part, reflected the tempestuous technology business climate, not least the collapse of Silicon Valley Bank in March.
Despite this, unaudited aggregated annual recurring revenue of its portfolio companies increased by 97% from 2021 to 2022, which has historically been the primary driver of valuation growth, while they also saw a 66% rise in employee numbers and a 19% growth in ARR per employee from 2021 to 2022.
Commenting on the results, Tern's CEO, Al Sisto said: "Whilst it is disappointing to report a reduction in the unrealised fair value of a number of our companies, a large part of the fair value decrease at the year end, is a reflection of the dramatic decrease in valuation metrics and models in the technology sector rather than the underlying prospects of our companies”
"We believe that our portfolio remain well positioned for successful exits at the right time. While uncertainty may persist in the shorter term, we are heartened by the indicators we are seeing in the market that point to a return to improvements in valuations."
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Tern is a provider of venture capital to IoT innovators seeking scale and market share. The company has a diverse portfolio, ranging from healthcare VR education platforms to device identity management, all seeking to disrupt existing markets.
The Internet of Things describes the network of physical objects that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet. Businesses deploying this technology can see immense cost savings along with being more sustainable, for example, by cutting the distance products have to travel or driving energy-efficient buildings.
Tern said that despite the challenges posed by macroeconomic factors and geopolitical conflicts, current market indicators suggest a return towards improved valuations. Its portfolio remains well-positioned for successful exits at the right time given the anticipated growth of the IoT market.
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