Proactive - Interviews for investors

EMV Capital CEO discusses asset growth and outlines strategic roadmap

EMV Capital (AIM:EMVC) CEO Ilian Iliev speaks with Proactive's Stephen Gunnion about the company’s remarkable growth and future plans. Iliev emphasised that EMV Capital has crossed a significant milestone of £100 million in assets under management, with £41 million being direct balance sheet holdings. He also discussed the company’s strategy of investing in deep tech and life sciences, which he believes will define tomorrow’s economy.

“We’ve grown both our portfolio and its value through a proactive investment management strategy,” Iliev said, referencing EMV Capital’s increase from 8 to 70 companies in its portfolio since 2021. He highlighted key developments, including raising £6.4 million in syndicated funding despite challenging market conditions.

Looking ahead, Iliev outlined a roadmap focused on scaling the company’s fund management practice, growing US operations, and reaching £200 million in assets under management. He is confident that EMV Capital’s patient growth approach and its investments in real fundamentals will continue to drive success.

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Broadcast on:: 01 Oct 2024
Audio Format:: other

Hello, you're watching Proactive. I'm joined by EMV Capital CEO, Dr. Ilyan Ilyev. Ilyan, very good to speak with you. Your atmosphere interim results this week. Can you take us through the highlights for the period because it looked like a very successful period, big milestone. You passed 100 million pounds in assets under management. Stephen, thank you very much. That's right. I mean, the compound has gone from strength to strength over the last few years, gradually and patiently building our model for investing in deep tech and life sciences, which, as you recall, includes generating revenues, recurring revenues from fund management fees, transactional fees from our corporate finance practice, but more importantly, investing in the companies that will define our tomorrow, whether it's in life sciences, deep tech, industrials, and elsewhere. This patient growth approach is not paying off. As you've noted, we've reached 100 million plus in assets under management, but importantly, 41 million of this is in direct balance sheet holdings, as in this is directly owned by EMV Capital POC, the balance being from investors. So tell us how you achieved that growth. Where did it come from? So the starting point for us was in 2020, when net scientific POC acquired EMV Capital. And at that point, we developed this new investment strategy of combining a little bit of balance sheet investment with the syndicated investments of EMV Capital. Through that period, the company has grown both in terms of portfolio size growth from eight companies, then to 70 companies, now, but importantly, also growing the fair value of the group. And if we look at underneath that, at the end of 2019, the fair value was of the direct holdings for roughly 12 million. It is now 41 million. And the fair value of the assets and third party assets on the management was zero. We're just wondering, it is now 65 million. So in almost growth, in terms of how we got there, was the building blocks of the EMV Capital strategy. It's proactive investment management of our portfolio. We're very close to the companies we work with, especially the ones where we have a bigger holding. The combination of direct investment and syndicated means we have more tools to grow value. We also have access to carried interest. And we also have the value creation services side, which enables us to work with or intervene those needed in companies that need some support to get them to the next stage. As a result, to talk some numbers, for the first half of the year, the revenues from the core, that is to say, the EOC and EMV Capital and the corporate finance side has increased to a million pounds compared to 0.7 million, the H1 2023. This is profitable, and it is covering 66% of the platform costs. Very important, by comparison to some of our other players and competitors on the A market, we're able to cover a significant part of our costs. You talk about the challenging environments in the commentary, Iliyan, but you still manage to raise 6.4 million in syndicated funding. How does that position you going forward into the second half of the year and also beyond? Look, it's no secret that we're going through a very difficult realignment in the markets. And that's on many levels. Clearly, on a global geopolitical level, we already read the news. But in the context of our markets, where we operate on other difficulties on the A market, but equally the venture capital industry, on a global level, is going through a generational realignment, I would say, whereby the old model of investing in most of digital sales companies has exhausted its ability to provide above normal returns. And the VC industry as a whole, and the institutional investors behind that, are realigning, re-evaluating where the opposition they're funding next. Our thesis is that what we do in the deep-tech and life-size space, and the way we do it, is a signature approach that will be a winner in the emerging venture capital space. So yes, on the one hand, it is a difficult environment, companies are struggling to get the funding they need, they're having to pivot to the investment models and to find more capital efficient ways of growing. You know what we welcome that, because that's exactly how we think about businesses in this space. And this is how we've been able to continue to support our portfolio. The 6.7 million that you mentioned, that has been focused on existing portfolio companies, helping the companies to anchor bigarounds, such as the 3.7 million round with it, with software and technologies, or helping companies such as deep-tech recycling in the plastic waste recycling space, launch their first projects. All of it is focused on real businesses, real fundamentals with real products on the market. You also talk about your strategic roadmap for the next three years. You recently went through the rebranding as EMB Capital. Take us through that strategic roadmap. So I think the rebranding, it was the right time to rebrand now. Because the different modules we've been building over the last few years are now there to be seen. I've talked about the proactive investment approach, syndicated capital light. But in addition to that, we have now launched our fund management practice. In May, we took over the fund management mandate for the well-known early-state VC from Cambridge called Math at Capital, adding 24.1 million pounds to our AUM. But in addition, adding a really strong selection of companies, some of the best early-state companies in the UK to our brother portfolio, giving us more opportunities to invest. We also relaunched our year's investment practice. So that was our, I suppose, the final bit in our model that we now look into scale. Within that, moving towards the single brand of EMB Capital enables us to show the market look. It's one house, multiple playbooks, multiple tools, all of it working together to create growth to the next stage. So in terms of what's coming up next, we'll be looking to scale our funds practice by launching further funds and continuing to grow our year's investment practice. So today, we're at just over 100 million. For us, the next milestone is 200 million plus. Importantly, as we grow our fund practice, the recurrent fund fees that come from that will continue to strengthen our financial position. And indeed, we've established a route to breakeven on the back of recurring and transactional fees. To simplify from a market investment perspective, we want to be in a position where you get the PLC for free, if you will, and you sit in for the upside of the investment. Now, how to maximize the upside will continue to grow the value of our portfolio companies through proactive management, value creation services, all the good things we've been doing that we have demonstrated, and of course, driving the companies towards it, towards an exit. It's the combination of these tools that we believe will take us to being one of the leading VC investors in deep tech and life sciences in the UK and Europe. I hope you'll keep us posted on all that progress. Thank you very much for speaking with us today. Thank you, Stephen. That's EMB Capital CEO, Dr. Iliyan Iliav.