Kinnevik AB (KINVB) Earnings Call Transcript & Summary

Thank you for tuning into Kinnevik's Capital Markets update this afternoon. My name is Torun Litzen, and I'm head of Corporate Communications at Kinnevik. We have a program in front of us, where we will listen to our CEO to give us a strategic update. We will hear from our incoming CFO, Samuel Sjöström, on the financial framework, and we will then go on to the investment side by presentations of our 2 senior investment directors, Andreas Bernström and Natalie Tydeman. So we are sending live from Stockholm today. And as you can also see in the program, you have 2 opportunities to post questions. Now in order to facilitate logistics, please try and send through your questions during the presentation. You can do so by clicking in your browser, and we will then make sure to try and answer as many of them as possible during the program. Now I have Kinnevik's CEO, Georgi Ganev, lined up here next to me to start the program. But before we do so, let's look at a short film on our transformation for the past 5 years. [Presentation]

Hi, everyone, and welcome to Kinnevik's Capital Markets Update 2022. The film you just saw showed some of the key achievements over the last 5 years. It also illustrated the transformational journey we have been on as a company, which has led us to where we are now. Today's session is focused on the future and Kinnevik's unique ability to continue winning. We're hosting this event with a quite remarkable backdrop, heading into what may very well be a deep recession in our markets. Clearly, we are feeling the cascade effects. The combination of weak economic markets, a tougher fundraising environment and unpredictable consumer demand for digital services is putting pressure on growth companies in the tech space, including ours. This has very little impact on our conviction in our strategy and in the long-term power of technology. We remain firmly committed to building transformative digital companies that makes people's lives better and believe this will create long-term shareholder value, considerably high when betting against these forces. It will, however, accelerate an overdue distinction between great companies, good companies, unproven companies and failing companies. We will have our share of each type of company but believe we have been disciplined in our capital allocation and will come out of this with superior returns, just as we did when we went into it. Also, crises create opportunities. At Kinnevik, we take comfort in the fact that we have a strong balance sheet and a permanent capital base that allows us to take a more long-term view than most other investors. Permanent capital has many benefits in this environment. We can deploy as much and as little capital as we want, all depending on the attractiveness of the opportunity. We are unrestricted as to proportions between new and follow-on investments as well as stages of company maturity. We can take a longer-term horizon and are not bound by typical fund structure cycles. We can support consolidation without the requirement for liquidity, and we can continuously evolve our investment strategies and themes. With our strong balance sheet, we can support and guide our strongest companies through the downturn and still have ample firepower to seize opportunities that will arise. We can sustain our momentum over the coming 18 to 24 months without entering net debt territory. Many of our largest and most important investments took advantage of the more favorable market conditions of the past to extend their runways, and this makes many of them less vulnerable to the medium-term fundraising market. And notably, several of our companies are already funded to breakeven even before adjusting their business plans to an even more difficult funding environment. What also helps us absorb the impact of deteriorating market conditions are the strides we have made in building a portfolio of companies that is balanced across the typical business S-curve in terms of growth and time to cash flow profitability. This is because we have allocated capital in an equally structured and disciplined manner, and I will get back to this in just a minute. Now I would like to look past the current market environment and talk about what makes Kinnevik unique, including our strategy, our investment focus and why we feel we are well placed to create long-term value. In short, what we do and why we will continue to win. First and foremost, I want to remind you of Kinnevik's overall ambition to be Europe's leading listed growth investor. Our strategy remains intact. We invest in digital companies that address vital everyday needs. We make full use of the breadth of our investable universe and our patient capital to be a bold, stage-agnostic, long-term partner and trusted adviser to our talented and passionate founders. We focus on broad themes in which disruptive technologies provide the opportunity to significantly append the landscape. Similarly, we look to deploy capital to regions that nurture innovation. And for us, that means Europe and the U.S. And finally, we use our strong track record and deep expertise to support our companies in building long-term, sustainable, transformative and successful businesses that makes people's lives better. Looking a bit closer now into the themes underpinning our investments. We look for fast-growing businesses that leverage disruptive technology to create new markets or redefine existing ones wherever they are. And on this slide, you will find the composition of our portfolio value based on the company's business models. As you can see, health care represent the largest share of our growth portfolio. And as you will recall, this sector has driven a substantial part of our growth in the past 5 years. Today, it makes up 25% of our total portfolio value compared to less than 1% 5 years ago. And in the last years, we have moved from virtual care to investing more into value-based models such as VillageMD and Cityblock, and more recently, in companies like Quit Genius and Spring Health. And they offer focused care solutions for the employer market with a very strong growth and margins trajectory. Similarly, Babylon is becoming a virtual first value-based care provider focused on the U.S. And we at Kinnevik continue to believe there is a massive opportunity for new technology and innovation to improve access to and quality of care for people globally. In addition, there are several themes hidden beneath these various business models. One example of that is the future of work theme with Jobandtalent, SafetyWing and Omnipresent, which pans across the platforms and marketplaces, the software and the early bets buckets. And Natalie will expand on this theme later on in the program. The strategy we set out is what guides us towards achieving our vision of being Europe's leading listed growth investor. There are 4 reasons to believe in Kinnevik and the effectiveness of our strategy in creating superior shareholder value. Firstly, our entrepreneurial team has hands-on operational expertise in navigating complex business environments. They founded and operated challenging businesses through periods of significant change, digitization of business models and milestones moments such as mergers, acquisitions and exit. Our operating model allows our sector experts to spend significant time with the team at our companies as active partners. Secondly, we have a strong track record of building successful businesses over the long term. At Kinnevik, we have always focused on finding the next generation of winning businesses and working closely with them over decades of growth. The main reason we can do this is that we have the flexibility of permanent capital, unrestricted by investment constraints and fund maturities, making us a well-placed partner to our businesses at every stage of their journey. Thirdly, our deeply embedded sustainability principles sets us apart from other investors and will bring the greatest returns 30 years from now. We believe that to be a long-term successful company, you need to contribute to making the world a better place. Integrating sustainability in the company's core business models and value creation proposition will bring the greatest returns for shareholders over the long term. And importantly, we want to support the digital businesses of tomorrow to create a more sustainable and resilient future because we simply believe this will give us a commercial advantage. And we'll lead by example, setting bold targets for ourselves. Finally, the fourth and final pillar is our uniqueness as a public company. Kinnevik offers a rare opportunity for retail and institutional investors to gain access and exposure to the world's most exciting fast-growing tech-enabled private companies. And investors can choose to enter or to exit our stock at any time at market value. Our team, our network, our financial flexibility, our sustainability focus and strong track record are the fundamentals that enable us to maintain a strong pipeline of exciting investment opportunities. Another key success factor and differentiator for Kinnevik is the Kinnevik platform. It gives our portfolio companies access to the expertise, the tools, resources and network across the full Kinnevik group. And in September this year, we welcome the founders and the CEOs of our portfolio companies as well as representatives from the wider Kinnevik ecosystem to Stockholm for the annual Kinnevik Summit. It was a truly inspiring event, where people could learn from a charter, share ideas and knowledge and build lasting relationships. And here's a short film from that event to give you some sense of this great community. [Presentation]

As you can see on this slide, the longer-term returns in our growth portfolio are strong in spite of the significant write-downs in 2022. A lot of the returns in 2018 and 2019 have already been realized and are, as such, not on paper returns. The majority of the companies we invested in 3 to 5 years ago are at many multiples of 4x to 7x, again, despite the tough market conditions as of late. In addition, we believe our entry levers today and over the coming quarters provide great potential for strong returns also going forward. As you saw from the film at the beginning, in recent years, we have made strides in evolving the portfolio towards a higher proportion of growth companies. We have also built a much more balanced portfolio of companies spread across the typical S-curve in terms of growth and time to profitability. This speaks to the uniqueness of Kinnevik. We can invest in both private and public businesses, and we can invest earlier and more later stage for the right opportunity. And this page shows some illustrative examples from our portfolio of companies on the S-curves. To the right, you will find Jobandtalent, which we invested in late last year, a relatively mature company that grew revenues by 130% in 2021 while being profitable at an EBITDA level. The company is now fully funded to breakeven. And we're very happy to have the Co-Founder and Co-CEO of Jobandtalent, Juan Urdiales, with us today [ via link ]. Natalie will speak with him later about the company's growth, their expansion plans, profitability profile among other. Just next to Jobandtalent, we have Budbee, which is an example of a company that has successfully moved along the S-curve since we invested back in 2018. Andreas is joining us later to update you on Budbee's combination with Instabox as well as on our broader Nordic strategy. As I mentioned before, one of the advantages of permanent capital is it allows us to constantly evolve our investment strategies and themes. While we continue to focus on our core themes, we're also taking the time to explore new and adjacent areas. And one which is relatively new to us, is that of combating climate change, the challenge of our generation. Kinnevik has spent a considerable amount of time and resources in this space over the last 2 years analyzing the key drivers and the most interesting investment opportunities. And as you know, reaching the 1.5 degree target stipulated in the Paris Agreement will require massive investments in innovation across all industries globally. With Kinnevik's permanent capital, our history of disruption and long-term business building, we are an ideal partner to back companies with the potential to create significant value by combating climate change. Today, we announced 2 new investments in this space, Solugen and H2 Green Steel. And Natalie will talk more about this later. And we will also be joined by Solugen's founders, Gaurab Chakrabarti and Sean Hunt. Now going forward we have 3 clear priorities. The first is maintaining our investment momentum of around SEK 5 billion per year, and slightly more than that this year. To create value for our shareholders, we need to keep up identifying the best opportunities, making full use of our permanent capital to back visionary founders and build for the long term. And this requires us to maintain a strong balance sheet. The second is ensuring we remain disciplined in our capital allocation and maintain a high and absolute bar for what constitutes great investments irrespective of market environment. The third is to make sure we seize the opportunities of this downturn. Never waste a good crisis. We have exceptionally strong cash position, an experienced team and a broad network. We need to leverage all of these to make sure Kinnevik and our portfolio companies emerge stronger out of this downturn. With that, I would like to hand over to our incoming Chief Financial Officer, Samuel Sjöström. He will talk to you about our valuation framework and our financial position. Thank you so much for listening and joining us this morning.

Thank you for that introduction, Georgi, and good afternoon, everyone. So I plan to spend around 15 minutes covering the 3 integral parts of our finances, how we think about in the current market environment and how they fit into our permanent capital model. It should not come as a surprise that these are, firstly, the valuations of our private investments, but allowing ourselves to take a step back from the quarter-on-quarter earnings perspective we spent this morning's call on. Secondly, our view on our capital structure and then lastly, our capital allocation plans. So starting off on valuations then. Now one of the things that sets Kinnevik apart from many other growth investors is that we're a publicly listed company investing out of our own balance sheet. Our equity capital is liquid and it's permanent, meaning we're not bound by any exit horizons. Rather, we can hold on to our investments for as long as we believe that they will generate strong returns to our shareholders. Now for a fund investor enjoying the shade of private markets and that ultimately needs to return its capital back to investors, an on paper NAV is arguably of limited importance. And the flip side of our long-term horizon, on the other hand, is that we post our investors, you and all other stakeholders, on what we believe is the true fair value of all our investments on a quarterly basis. For us, that NAV statement is the one paramount metric for measuring our performance because, again, as a public permanent capital investment company, we offer our investors a luxury not afforded to them in private markets, and that's liquidity. Now this liquidity allows our shareholders to realize returns that to us at Kinnevik are still just on paper and may very well remain on paper for decades to come. It also gives new investors the ability to invest in a proven set of assets, a proven team and an established growth investment platform at a timing of their liking. Now to both buyers and sellers, we have an obligation to seek to ensure that they can exit and enter our stock at fair value. And this is why we spend considerable amounts of time and resources on assessing and reporting these numbers to you all. And with 2/3 of our portfolio invested in private assets now for Q3, this is a lot more important now than when we started our transformation back in 2018 with just around 13% of our portfolio being private. In times like these, you hear fund investors increasingly looking and talking about measures like distributions to paid-in capital when assessing their fund investments. And this points to the difficulties with the forced need for funds to monetize their portfolio. Meanwhile, on the main market, our stock has turned over more than SEK 265 billion since 2018 at an average 6% discount to NAV. We're around 3x to 4x our average NAV during that same period. And that, we believe, makes Kinnevik a very different and stronger investment opportunity because we allow investors again to step out and step in at their discretion and optimally at or around fair value. So if that is the broader perspective on why, then just shortly on the how. Now I could spend 2 hours on this topic. It wouldn't do miracles for the viewership. So for those particularly interested in this topic, I suggest you instead consult Note 4 in our quarterlies as well as the deep dive presentation that we provided in connection with our Q1 report earlier this year. But in short, our valuations of each of our private investments correspond to what we believe that we would receive in an orderly sale of each investment at arm's length. Nothing more, nothing less. Sometimes, we've proven to have been a bit high, sometimes we're pretty much bang on target. And most of the times, we tend to be a bit low. And while we've radically increased the transparency around how we reach these assessments relative to the start of our transformation in 2018, we're cautious that our private companies are private for a very good reason. We will never become this rent-a-quote operation, forcing quarterly capitalism on young businesses building for the longer term. What we will focus on instead is continuing to be transparent and elaborate on how we're forming our assessments and ensuring their integrity. Thereby, we're making sure not only that our NAV is fair, but that you all can take a view on where you think it's headed. Now I can't help myself but just take a few minutes of your time to address somewhat of a misconception that tends to pop up as it relates to our valuations. It's also a pretty nice segue if you ask me into the more interesting topics that Andreas and Natalie will cover later, namely what type of businesses we actually invest in. Now what I'd like to address is this concept of the average peer. Now this is fiction. We use this concept to provide you with clear and easily understood data points in our quarterly report, but the benchmarks we actually use in valuing our businesses is not one smoothed out average. Our benchmarks are a number of individual businesses facing both shared and individual challenges and opportunities with similar or different circumstances and financial profiles and as is each of our companies. So here, you now see a chart with NTM revenue multiples on the Y-axis, revenue growth on the X-axis. The gray blob in the middle is the average of around 70 of the largest SaaS companies in the U.S. And this average company trades at around 6.5x revenues and grows by around 25%. Mildly exciting. Now judging by the scales of the 2 axes, you might have a sense of where this is headed. Because here's the same data set when we unpack that fictional average company into its 70 actual constituents. As you can see from the clustering here on this page, multiples tend to correlate quite nicely with growth. And for end of September, growth rates could actually explain almost half of the variance we see here in SaaS multiples. But we're still not making good use of the right most part of this chart, are we? Here's the same chart with some of our larger software or software-esque businesses plotted in. Now growth is still the key driver of multiples in our pockets of the market. But the correlation between multiples and cash flow has increased significantly in 2022 relative to 2021. And that is also why you typically find our cash-consuming software businesses below this trend line. Now as you can tell, we're not interested in the bottom left nor are we interested in the average gray blobs of the world. We are about the top right of high-quality, high-growth young and private businesses. We'd much rather pay 20x revenues for a SaaS business doubling in size year-on-year than one that trades at 6x for a growth rate of 20%. And why is that? Well, because we can hold on to these investments for the very long term and have their growth compound over and over again. And the fact that a high-growth business cost more than a low-growth business does not mean that one valuation is more fair than another nor that they provide the same return opportunity if you're good at picking them. All right. I think that's probably enough about valuations if we want people to stay tuned, let alone awake. So let's then hop over to our view on our capital structure and deployment. So balance sheet. We basically have one overarching principle as it relates to our capital structure, and that is to maintain a balance sheet that allows us to support our businesses and sustain our investment momentum. Within the boundaries of optimizing long-term shareholder value creation, this trumps all other considerations, and it's the one North Star for our capital structure ambitions. Knowing when in time grade investments or exits will materialize is hard, if not impossible. And we firmly believe that the value of always being ready and able to pursue attractive opportunities will eclipse whatever value can be created or augmented by maintaining a slimmer and more efficient balance sheet. During 2019, we missed out on a few fantastic opportunities because we lacked the financial muscles. And back then, we decided to work hard to ensure we did not end up in that situation again. And since then, as you can see from this chart, we've both been increasing the intensity of our capital reallocation and have maintained a net cash position of between 1x to 2x our rolling last 12 months' worth of capital deployed. For end of Q3, we held SEK 12.5 billion net cash position. We appreciate that this may seem on the high side of things, at least it did to some a few months back. However, as mentioned, we believe that the value of what we can achieve with this level of financial strength and, may I say, peace of mind, in particular during times like these, well exceeds the short-term potential gains of a slimmer balance sheet. This SEK 12.5 billion net cash position means that we can uphold the deployment of around SEK 5 billion gross investments a year well into late 2024 before entering net debt territory. And on top of that, we have SEK 3.5 billion in bonds maturing in 2025, '26 and '28. So to sum up, we're very happy with where we are from a firepower perspective, considering also where we are in the cycle. But then what about after these next 24 or so months? Well, considering what's unfolded over the last 24 months, a lot will have happened over the next 24. But at or around that time, the idea is that we will primarily fund ourselves through rotating our capital. Because while our holding period is uncapped, in practice, it will be finite for a number of our investments. And our growth portfolio is still very young. It's been getting younger over the last few years, unlike myself. And at the start of 2018, the average tenure in our portfolio, when excluding Zalando and all our TMT investments at the time, like Tele2, Millicom, MTG, that tenure was around 6 years. For end of September this year, that number is closer to 3, 3.5 years. Now that poses some challenges on the reallocation of our capital considering our long-term mindset even before markets turns sour. Coming into the current market trough, we'd already started delivering some proof points on the ability of our growth portfolio to finance itself. We'd realize strong returns by releasing more than SEK 8 billion out of investments like Bread, Livongo, VillageMD, and we redeployed that capital into new and existing assets. In total, these exits actually make up more than 40% of the capital we've invested in our growth portfolio in total since 2016. And when the exit market comes back to life eventually, we believe that this flywheel will start moving again. Lastly then, how do we intend to use this financial strength in the more medium term? Now I believe most of you will recall, our capital allocation framework that we introduced in 2019 when we went public with our intentions to transform Kinnevik into the growth investment firm we are today. We told you back then that we would invest 1/3 of our capital into first-round investments and 2/3 into follow-ons. We told you that we would add around 4 companies per year to our portfolio and that we would aim to accrete 15% to 25% stakes in our best businesses and over time build a well-distributed portfolio of 30 meaningful companies across sectors and stages of maturity. Now the objective of this framework was to provide clarity and predictability to a quite drastic and transformative change in equity story. And in the first 2 years, our capital allocation largely followed these parameters. But then 2 achievements began to crystallize. Now you heard Georgi talk about the strides we've made in building out a broad, significant and balanced growth portfolio. I just covered the strength of our financial position. And these 2 factors are what have instilled the confidence and encouragement for us to slowly but steadily take steps outside this framework. So looking back then on the last 3 years and 3 quarters, what has happened? Well, we have overallocated slightly into new investments relative to our framework, adding more companies than we perhaps originally set out. We've accumulated an average ownership stake of around 12% in our businesses. And we've continued to evolve our thematic focus, as Andreas and Natalie will touch on shortly. And the portfolio balance that Georgi mentioned has also had the effect that 6 companies make up more than 5% of our growth portfolio by value. But these 6 companies only make up a combined 55%. So drawing and building on this and having learned a few lessons these last few years, on the rightmost side of this page, we have our new and current thinking on our capital allocation. Going forward, you should expect us to split our capital about 50-50 between new and follow-on investments. You should expect us to add no more than around 8 companies per year with ebbs and flows depending on the opportunities we find. And you should expect us to not focus on evening out our sector exposure, but rather to continue to evolve it. Now we've grown more comfortable with lower ownership stakes, in particular, in later-stage assets. And going forward, we will focus more on ensuring that we have an adequate level of influence rather than a specific percentage stake. And lastly, you should expect us to continue growing our portfolio in terms of number of companies. But considering the inevitable power [ load ] distribution of that portfolio as it grows and evolves, we expect around maybe 10 to 20 companies to be more material to our short- and medium-term development at any given point in time. Now these parameters should not be taken as gospel. We will not be piling in capital into underperformers nor will we pass on a great new investment just to hit these proportions. But we believe that these parameters give solid enough guidance as to where we believe we should end up if we continue focusing on pursuing the best opportunities to deploy our shareholders' capital. Okay. So to wrap up. Firstly, running a listed permanent capital vehicle obliges us to treat our quarterly valuations with the utmost respect and provides investors a unique combination of liquidity in illiquid growth assets. Secondly, we are investing in high-growth businesses, which at times may be difficult to value, but we have very much rebased our valuations to today's public market environment. Thirdly, our balance sheet is strong and will remain so until the IPO and exit market returns, and we can restart our reallocation flywheel within our growth portfolio. And lastly, with our balance sheet and the balanced portfolio we've built, we're amending our capital allocation framework for the years ahead to allow Kinnevik to be its opportunistic self more so than it has been during the first few years of our transformation. And with that, I believe we're ready for a brief Q&A session.

Thank you, Samuel. And please join us here in the sofa, where we have also Georgi. So maybe when Samuel finds his place, I'll start with you, Georgi. Both you and Samuel talked about climate, and we also amended the capital allocation framework to sort of allow for a larger number of companies in the portfolio. Do you see a risk that the portfolio becomes very scattered and too distributed and even maybe harder to follow?

I mean, first of all, I think we're coming from a situation where we had a greater portfolio concentration. Today, we are quite proud of the portfolio we have, which is balanced and broader. We also have plenty of capital. We have broadened our investment team with our expertise within different sectors, and we have a good inflow opportunity. So for us, it's natural to kind of evolve our existing sectors but also exploring new and adjacent areas. So even though we would kind of broaden our investment portfolio and profile, I would like to go back to what Samuel said that even though we might have more companies in the portfolio, there will be 10 to maybe 20 where we spend a lot of time and companies where they kind of -- their significant value matters at large for Kinnevik.

And we had a follow-on question also on the capital framework and how that will impact our return target, and if you see that going up with a new framework? Or how does that link into that?

Right. It's not necessarily the new framework that's going to drive that. It's the execution of it. If you look at our portfolio for Q3, I think the growth portfolio makes up around 60% of our NAV. And in that vector of the portfolio, we're looking to be delivering very competitive returns relative to our VC and growth investor competitors. So that puts us in sort of north of the 25% plus sort of level in terms of IRR over a cycle, I should say. The remaining 40% is now sitting in Tele2 and in cash. And clearly, we have a bit lower return expectations there. So what's going to drive that return target upwards is really the continued evolution of the portfolio. So continuing to deploy capital in accordance with this new framework and perhaps most importantly, our companies sort of delivering on their plans, accreting value and then gaining a larger share of our NAV.

Okay. And that brings me on to the next question that we've received, and that's around Tele2. Given that share of the portfolio is less and the focus is on growth, what is the role of Tele2? Does it play a role in the Kinnevik portfolio going forward?

I mean, as we said, we have been growing our portfolio of growth companies from a small share of the totality to 2/3. So 66% of our portfolio value sits within the fast-growing growth assets. And in that picture, I think Tele2 is a nice complement, a stable anchor, if you will, and also a stable dividend player. And we are using that capital, recycling it and investing in new opportunities. So I think it fits well in our portfolio.

But, Samuel, you mentioned that our investment, that we will keep up a fairly high investment momentum. So someone in the audience is asking, how do you see our capital sort of -- our capital allocation beyond the SEK 12-plus billion we have on our balance sheet now? I mean, what is the plan given that even if we get a dividend from Tele2, it will not suffice to uphold that momentum?

No, it will help, but not quite suffice. We've anchored this sort of SEK 5 billion baseline in terms of gross investments per year. That's very much under our control. So clearly, there is some element of tempering that deployment to make sure that the net cash position lasts sort of into a point in time when the reallocation flywheel that I mentioned can be sort of set in motion again. Now that's anyone's guess in terms of when that market comes back. But we feel that with 24 months worth of runway until we're in leverage territory, there'll be plenty of time to calibrate and triangulate that deployment to make sure that we sort of cross that bridge, if you may.

And then speaking, Georgi, about the investment momentum and pace of investment. I mean, do you think -- we were very active last year. Do you think there's a risk that we sort of overinvested in a very heated market? And when do you think the sort of conditions will improve from where we are today?

Firstly, I think as a permanent capital vehicle it's important to keep up the investment momentum through the cycles, right? It's not our job to try to predict exactly where we are in that cycle. And going back to 2021, we invested SEK 6.5 billion. But SEK 5.5 billion of those, so 80% came from reallocation within the growth portfolio. I think that's the uniqueness and strength of Kinnevik, right, that we can also recycle going back to what Samuel said with the flywheel. Of course, in times like this, it might be difficult to reallocate that capital within that growth portfolio. And therefore, we have this buffer, if you will, or this strong balance sheet and a SEK 12.5 billion that we can deploy over a quite long period of time. So I said 18 to 24 months before we're in the net debt territory. So I think this has bought us ourselves some good time. But most importantly, our job, I think, is to find the best businesses with the most talented and passionate founders. And when we find those, we back them, irrespective of where we are in a certain cycle.

But anyone who can do the math could see that with a discount that the Kinnevik share is trading at, at the moment, one good investment could potentially be to buy back our own shares. Is that something that we -- you would consider?

Personally, I've done it quite a lot, yes. But from a Kinnevik perspective, the short answer is we don't currently have a mandate. So we would need to go to our shareholders and propose it first. But I fully appreciate that, that question sort of pops up in these times. But for now, we feel like we can make better use of our capital by injecting it into our companies and new companies rather than just buying back our own stock. So no, for now, we're very much focused on sort of finding opportunities in and outside our portfolio rather than in the Kinnevik share.

I think as with always, it's a kind of priority list, right? I mean, as you say, Samuel, what we are looking for is to drive value within our portfolio companies. That can be through consolidation, as we've showed today or discussed today, within Instabox and Budbee. I think it's very important that we try to drive that actively or as an active owner. If that requires more capital, very good. Then we have the funds needed, right? And we're also spending a lot of time in looking for new opportunities as we've disclosed today, new investments that are very exciting. And maybe some down -- I mean, further down on that priority list would be the option to buy our own stock if we cannot do the others. But we would anyhow then go back to our shareholders and ask for that approval.

Yes. I think that was the extent of the questions we have received. And I also think it's a good switch to then move over to the people that are looking for our investment opportunities and running part of the portfolio. So I would like to start with Andreas Bernström, who heads up the Nordic investment team based here in Stockholm. And he will talk to us a bit about the Nordic portfolio and some of the new companies also that we have in that portfolio. So Andreas, over to you.

Good afternoon, and thanks for that introduction. Always nice to see your name in lights. I started at Kinnevik almost 5 years ago with a mandate to reestablish Kinnevik as a leading investor in the Nordics after not investing for almost a decade. The Nordics is a region with a thriving tech ecosystem that continuously gives birth to new and exciting businesses. There were so many good reasons for Kinnevik to be able to take a leading position in this market. We have developed a strong reputation and brand as a venture and growth investor with strong access to deals and high dependability as a partner. We also have a strong and broad network built over many decades that, if fully utilized, should offer us an edge to building a strong pipeline, but at the same time, derisking investment decisions by understanding founders, teams and co-investors. Since 2018, we have invested in and built a diverse portfolio of 12 companies, investing in multiple sectors such as enablers, climate, financial services, the future of work and food at different stages of the S-curve. It's always difficult to take a snapshot of performance, and time will tell. But our first cohort of investments made in 2018 which is starting to mature includes companies such as Pleo, Budbee and Oda and is performing very strongly indeed even in these compressed markets. These 3 companies are exceptional. And even if they have come a long way, the opportunities for these companies to grow, develop and win their respective areas is considerable. This 2018 cohort has a current IRR of 54%. As Georgi mentioned in his presentation, Kinnevik has the flexibility to invest early or later for the right opportunity and continue investing in subsequent funding rounds through IPO and beyond. Budbee and Pleo are great examples how small investments in Series A companies initially focused on their national home markets can grow into large multinational companies that really move the needle for Kinnevik. These 2 companies are now some of our largest holdings and have both successfully moved along the maturity S-curve that Georgi showed you before. In both cases, at the time of investment, we were incredibly impressed by the respective founder's ability to articulate and focus efforts on disrupting traditional industries, logistics and spend management. They did this by focusing on how to massively improve the consumer experience. Historically, logistics companies were providing services to enterprises in terms of cost and speed, where Budbee saw an opportunity to reengineer a mundane task into something that delighted end consumers. And there are material benefits for e-commerce merchants in a supreme consumer experience as their customers will purchase more often, have a higher basket value and reduced customer service interactions. Likewise, in spend management, incumbents had sold to and focused on ensuring that the CFO and the financial teams were content with the product and that they felt in control. Pleo honed their efforts on making sure that the end user of the product, the employee, loved the service, focusing on ease of use, transparency and trust. Interestingly, the happier the employee became, the easier life became for the administrator of the service, creating advocates of Pleo at multiple levels in the company, thereby fueling growth. Speaking of Budbee, it would be remiss of me to spend time with you today and not mention the proposed merger between Instabox and Budbee, 2 companies founded some 8 years ago that have successfully pioneered improved last mile logistics. These 2 companies have an incredibly complementary product portfolio. Budbee with home deliveries and Instabox with boxed deliveries, offering consumers and e-commerce companies optimal flexibility. The companies also have a complementary geographical footprint across Northern Europe, where combining their international efforts rather than competing will drive a better product and higher efficiencies. Both companies have a strong complementary founder-led culture and also strong cap tables. And we see with great optimism the opportunity that Instabee has in front of it to continue to grow and cement its position as the leader in last mile deliveries. We first invested in Budbee in 2018, and since then the company has grown its revenue by 10x. Meanwhile, we have generated a 14x return on our initial investment and supported the growth journey by investing at or above pro rata in every funding round since then with an aggregate 5x return on the investment to date. The combination with Instabox shows how building quality companies can facilitate value-accretive consolidation, strengthening both the growth and profitability profile of the joint entity, particularly valuable at times of market volatility. So moving on to talk about some of our most recent investments and our exciting pipeline of new companies. We have a very strong deal flow in the Nordics due to our brand, portfolio reputation and network, which means we get to look at a great deal of companies. And this year will be no exception. It's likely we will have spent time on over 200 companies to decide which ones we feel are likely to be exceptional but also to fit our investment criteria. So far this year, we have invested in 2 companies in areas that we have spent considerable time on and areas we expect to invest further in, also outside of the Nordics. These themes are climate through our Agreena investment and future of work through SafetyWing. We've invested in these 2 themes internationally this year as well through Solugen announced today, Omnipresent, Jobandtalent. And Natalie will speak to you in a little bit about both of those themes. Our climate investment, Agreena, is an incredible business supporting farmers to make a sustainable and profitable transition to regenerative farming practices. As you can imagine, a fragmented and somewhat difficult market to change but one that stands for over 10% of greenhouse gases. Agreena have created a playbook of technology, education and AI satellite technology to support that transition for farmers, backed by revenue streams through carbon certificates. And the results speak for themselves, where Agreena has increased their contracted hectares by 10x in the last 12 months. Our future of work investment, SafetyWing, was founded in 2018, believing in a remote and global future workforce. Today, SafetyWing supports over 20,000 users with our first ever global health and travel insurance for remote companies and individuals. They were inspired by the Nordic social safety net and a built-to-service that allows any company recruiting remotely to offer that inclusive safety net to their employees. The company will grow by over 100% in 2022. Our conviction is that these seemingly small investments can move along that S-curve with time and will move the needle in the same way as Pleo and Budbee had done. And with that, I'd like to hand over to Torun.

Thank you, Andreas. And as a reminder, if you have questions to Andreas, we will ask him to come back after Natalie and he will then be ready to answer any questions that you may have. So do send them through by clicking in your browser. We will now head over to our international investments. And taking us through those is Natalie Tydeman. Natalie joined us in beginning of 2021. And she has, as also Andreas alluded to, spent considerable amount of time analyzing some of the themes that she will be talking about, that is the future of work and how we will organize the workforce globally. And the other theme that she will touch on is the future of the climate in terms of climate tech and how we plan to invest to combat climate change. So Natalie is joining us on a link from London. So I would like to hand the call over to you.

Hi. Good afternoon. It's my pleasure today to talk to you about the future of work and the future of planet. These are 2 investment themes which have spun out of and leverage the path for work that we've been doing with our portfolio companies over several years in the areas of people and sustainability. Let's turn to the presentation. We start with human capital or the future of work. Now this is a huge trillion-dollar market which is currently undergoing massive, massive disruption. I would characterize human capital management or the future of work as more a new theme rather than a new sector and really a very natural extension of Kinnevik's historical focus and our areas of expertise. Georgi mentioned earlier, he highlighted that we're looking to invest in businesses that are harnessing the power of technology to address vital everyday needs, of which the need to work is one of the most basic. We have very deep expertise in many of the relevant business models within human capital management. That includes marketplaces for workers and for jobs, consumerization of enterprise and Software-as-a-Service. Human capital management in addition leverages, as I mentioned, the expertise in D&I, in diversity and inclusion, and the insights that we have gained from our hands-on work with our portfolio companies, helping founders and management teams build the organizations and scaling those organizations. So as I mentioned, the workplace is undergoing significant disruption. If we could move on to the next slide. This has -- this is at a level that hasn't been seen for many decades, and it results from a number of different factors: COVID; in the U.K., you have Brexit; then you have at a global level, a demand for new skill sets alongside the automation of traditional skills together with the entry of the first generation of true digital natives into the workforce. So we've looked at some of the mega trends that emerge from this disruption. I would call out, first of all, the new generation entering the workforce resulting in the increasing prominence of freelance and fractional work. So this new generation is a generation that was brought up in the fractional economy, and that impacts the way not only that they consume products and services, but also in the way that they want to work. Today, already almost 50% of Gen Z are freelancers. And it's estimated that by 2027, full-time freelances will represent about 50% of the total U.S. workforce. Second theme I'd call out is that remote workforce is looking -- set to be a permanent fixture. COVID showed that it was possible to work anywhere, and multiple tech tools and platforms have since sprung up to support that remote work. You've already heard about a couple of areas that we spent time in from Andreas. At the same time, you've seen some growing skill shortages and a tight labor market, and that together is forcing companies to look further if they are able to source their talent. And so experts are now estimating that up to 1/4 or 1/3 of all professional jobs could be permanently remote. The third mega trend that I would highlight is the urgent need of up and reskilling the workforce. This is driven by the skills gap that I talked about as legacy job profiles are automated, at the same time, as the AI and knowledge economy is demanding a new set of skills. So the workforce needs to adapt to this new division of labor between humans, machines and algorithms. The statistic is about 9 out of 10 industry executives highlight that they are today experiencing or anticipate that they will experience skills gaps in their workforces. And that this skills gap is going to result in over $150 billion in unrealized revenue in the U.S. by 2020 and globally up to $8.5 trillion. So these megatrends are fundamentally changing the relationship between the employer and the employee. And as a result, they are opening up some huge value creation opportunities for new technologies and new services. So we've identified a number of investment themes that we're interested in within this space. The first one I would highlight is focused on the new generation of digital native workers, graduates of the fractional economy, as I said, who are demanding new tools, processes, benefits and ways of working. Secondly, we would focus on the SMB segment. This segment is resource poor, understaffed, undertooled and currently underserved by the platforms that it needs to support enterprise-grade, employee experiences and business efficiencies. Lastly, and the -- sorry, thirdly, and this touches on something we'll talk about later with Juan, massive segments of the workforce and, in particular, blue collar and distributed workers are also underserved by technology. So as an illustration, white collar desk-based workers account for only 20% of the working population, but they benefit from 99% of the total investment in HR tech. The fourth theme that we look at is focused on the global war for talent, which has made worker acquisition and retention a high-value business-critical function. And lastly, the ever-expanding skills gap that I talked about is really driving government, enterprises and individuals to upskill and reskill in order to transition the existing workforce to serve future needs. So where have we got to in pursuing these themes? We've spent a lot of time reviewing a number of different opportunities in this area. In fact, over the past 18 months or so, we've reviewed over 80 future of work businesses, 30 of those we've reviewed in depth. We've taken 6 to investment committee, and we've ultimately invested SEK 1.6 billion into 3 companies. First was Jobandtalent, where we invested SEK 1 billion in Q4 last year. That addresses the theme I highlighted of underserved and underinvested in employee groups. And then in the first quarter of this year, we made 2 investments in the theme of new generation workers and remote workforces, investing almost SEK 400 million in Omnipresent and nearly SEK 200 million in SafetyWing. So coming on to Jobandtalent. In 2021, we invested EUR 100 million in Jobandtalent, a Madrid-based global Workforce-as-a-Service platform. Jobandtalent was exciting to us because it's disrupting a massive market, the $0.5 trillion, highly fragmented, low-service, temporary staffing market. It offers a managed marketplace of workers and jobs together with a proprietary job matching technology and a suite of digital tools that lets it increase the speed, the quality and the cost effectiveness of finding, hiring and managing temporary workers. It addresses the job insecurity, pay inequality, the lack of benefits, the low job satisfaction and the low engagement of blue collar temporary workers and is very much a worker-centric platform. And in this way, it's able to drive market-leading job fill rates, satisfaction and productivity for employers and workers. We're delighted with our investment in Jobandtalent. The company has grown more than 2x, as Georgi mentioned, since our investment last year. It's EBITDA profitable and fully funded, which is a very strong position to go into whatever may lay ahead in the next 12 months. We are delighted that Juan, the CEO and Founder of Jobandtalent, has joined us here today. We'll bring him on in a minute, but first of all, let's look at a short video. [Presentation]

Welcome, Juan. Thank you for joining us this afternoon. I think the audience is looking forward to learning more about Jobandtalent. It's an area that I know a lot of people are very interested in. So maybe to start off, you could take us back to the beginning a little bit and tell us more about the challenges that you were setting out to address when you founded Jobandtalent and how today Jobandtalent improves the lives and experiences of workers and enterprises.

Well, thank you, Natalie and the whole Kinnevik team for this invitation. I started Jobandtalent many years ago actually after the 2008 crisis in Spain. I was actually an entrepreneur at that time. I had a retail chain. And at that time, Spain was suffering a tremendous hit, like we had 25% of unemployment rate. And I was saying at that time how a lot of family members, friends were struggling to get jobs and to get access to the labor market. And at the same time, I was struggling to hire people in my retail chain. So that's why -- that's the initial idea of Jobandtalent, of doing something that really fixed the matching in the labor market. And many years after that, I think that the issue that I was facing has even gone to a worse situation, where we're seeing most of the essential and frontline workers working for many jobs during the year, spending a lot of time looking for jobs, and there are more of 500 million workers globally that are suffering to this insecurity when they're looking for jobs and working on temporary jobs. And we believe that all of this will be solved by the use of technology. And this is not only a vision, this is our reality. We have created a platform that has been used by more than 250,000 workers in the last 12 months in 10 different countries that is allowing the workers to find jobs in real-time through an app, is helping those workers to be hired in a very fast way, always with tremendous guarantees from the legal point of view, always with social security recognition, insurance. And then it's also allowing the companies to get access to a real-time workforce of highly engaged workers so they can control better their workforce and adapt that workforce better to their needs, and it's resulting into a much higher NPS and satisfaction levels for both parts of the marketplace. And we've not only stopped there. We are developing a lot of tools right now to improve actually the way that both workers and companies interact with each other. We have launched a lot of features to control better the shift management, [ declocking ], payroll, the payments to those workers to give access to them to instant payment in order to improve actually the satisfaction levels of the workers and get them -- and give to those type of workers status of a white collar type of worker. That is actually the mission of Jobandtalent.

Great. Thank you for that. A very impressive set of statistics. What do you think, Juan, has been the key to your success so far?

Well, I think that having a clear mission and being obsessed about fixing the issue that we want to fix in the market has been critical. Then I would point out that we have been -- my Co-Founder and myself, very ambitious. We knew that the problem and that the issues that we were facing was a global issue, a global problem. And we have had always the ambition to solve it not only in Spain or in Europe, but also globally. And then we have always thought that the key of the success is to be surrounded by a great team. So we overhired actually since the beginning to great people that was better than us in all of the aspects of the business. And finally, I must say that I think that we have been capable to build a quite humble team actually, that is conscious on the fact that we are not there yet. We need to keep improving for many stakeholders and workers and the companies using the platform. And that has been the motto for all of our existence since we started actually.

Great. Then maybe we can move on to some of the other drivers of your growth. So obviously, some of the things that you've talked about, the vision, the ambition, the team that you've built has enabled you to build very strong organic growth. But you've also, alongside that, used M&A in a very strategic way to unlock additional growth. Can you talk a little bit about the role that M&A has played in the journey so far and what role it will play going forward?

Yes. We as a marketplace, we generate a positive flywheel effect with volume. Our business gets better with volume and size. The more workers that we have, the more jobs that we have into the marketplace, it's like the faster that the jobs are fulfilled, more workers coming to the platform so we can serve more workers more rapidly at a higher quality. We're using M&A in a strategic way to boost the demand part of the marketplace, to get more jobs and more employers into the platform faster. So we have used M&A as a lever to grow faster in new geographies or to improve our presence in existing geographies in order to bring more jobs because then that triggers higher satisfaction level from the workers' perspective, which allow us to bring more workers into the platform and improve the flywheel effect. And we'll continue to use this lever strategically in the [ theater ] as we have a huge potential to continue building and growing the business within the next 5, 10 years.

Great. And hopefully, as Georgi said earlier, never waste a good crisis. The crisis may be to our advantage if to other's detriment may be an opportunity to continue that M&A. So maybe we can move on to the potential crisis and the potential economic downturn. One thing, Juan, that makes you stand out, I guess, amongst founders that we meet and founders that we know is that this is -- if we do now go into a global economic downturn, that will be your third global economic downturn as an entrepreneur. So you've learned obviously from the previous downturns. Would love to know what are the key lessons you've taken away, how do you think that strengthened you as a founder and how are you now preparing for what may lie ahead?

Obviously, like 3 principles here. The first one is killing -- well reacting very rapidly and killing the threat. And on a potential global recession, there will be many threats for any company and Jobandtalent will have some threats. So I have always reacted very rapidly to try to somehow mitigate those threats that can actually put the company in danger. And cash is the biggest threat. So a lot of measures have been taken around cash to be well prepared to any type of a scenario next year. Second one is about mitigating the risks and improving actually the efficiency of the company. Like prices are always good to improved efficiency of the company, and that's a big learning from the previous ones. And I think that we have put in place some measures in Jobandtalent that will actually be measures that remain for the long term, which will mean that we'll be a better company actually after this crisis. And the third one is about communicating and making an effort to keep communicating to the team the big picture. Because the team can suffer in these type of situations where they see that we can slow hirings or we can take some drastic decisions of stopping some expansions. And you need to show them the big picture. You need to show that with these measures, we'll pass next year in a quite healthy situation. And that will give Jobandtalent the tremendous opportunity to be one of the winners of this crisis after that. So -- and it's proven that the top companies actually in the world are those ones who survived actually the 2000 crisis of the tech bubble. And every single crisis is an opportunity for newcomers. So we -- it's important to reinforce that message internally to make everyone make a huge effort during this period to keep the motivation up, so everyone can see this as an opportunity.

Great. And that touches a bit on culture, and that's one of the things that also really excited us when we were first getting to know you and Felipe and the rest of the company. So you talked a bit about the need for communication and the big [indiscernible] would highlight that's important for you about culture that you think is helping to drive the success.