Swedish tech firm bullish for 2002

Having reduced the size of its portfolio, Novestra expects its remaining investments to perform well next year.

Novestra, a Swedish venture capitalist, is expecting a number of the technology companies in its portfolio to turn a profit in 2002, despite the current downturn in IT demand.

“We are bullish because even during such a terrible year for IT, a number of our companies have done well and once the market picks up, we believe they will perform even better”, said the firm’s chairman, Theodor Dalenson.

He said that three of Novestra’s companies, Qbranch, Stax and Dallas performed particularly well in a portfolio that has nearly doubled its combined revenues from SKr560m (E59.67) in 2000 to SKr1.2bn for 2001.

But despite today’s confidence, 2001 has proved tough for Novestra. During the summer, the company suffered a number of withdrawn or postponed exits, with both IPOs and trade sales under pressure. Adverse market conditions also made it difficult for some of the firm’s investments to raise additional capital in private placements, said the group.

For the period ended 31 June 2001, Novestra recorded a loss of E23m compared with a profit of E9.4m for the previous year. It subsequently decided to focus on fewer investee companies, reducing the portfolio from 15 to seven core holdings, said Dalenson. Novestra, whose financial year ends 31 December, is currently invested in 11 technology companies and has around SKr120m in cash.

“We decided not to spend anymore time or money and treat as losses the companies that did not deliver what they promised when they promised it,” said Dalenson.

The measures are expected to make a significant difference. For the year end, Dalenson expects a “significant improvement on the previous four quarters”, he said.

The firm is also hoping to float three of its investments next year. Once the company portfolio is balanced, and the companies earmarked for exit are on the right track, new investments will be sought as well, said Dalenson.