Kinnevik AB

STO:KINV B

Earnings Call Transcript 2023-Q1

[Operator]

Good day, and thank you for standing by. Welcome to Kinnevik First Quarter '23 Conference Call.I would now like to hand the conference over to your speaker today, Georgi Ganev, CEO of the company. Please go ahead.

[Georgi Ganev, executive]

Thank you very much. Good morning and welcome to the presentation of Kinnevik's results for the first quarter of 2023. I'm Georgi Ganev, Kinnevik's CEO; and with me today is our CFO, Samuel Sjostrom; and our Director of Corporate Communications, Torun Litzen. On today's call, we will be walking you through the key events during the quarter, including our most recent investment activity in healthcare. We will lay out the key valuation changes and finally, we will also track our progress against the priorities we set at the beginning of the year.On a more general note, the market backdrop have been very volatile with continued stock market turbulence in reaction to macroeconomic indicators. This instability was made worse by distress in the banking sector. However, the impact on Kinnevik and our companies was limited, but it served as a reminder of the importance financial resilience in these very uncertain times. While the growth in venture capital markets remain slow in the first quarter, 6 of our companies successfully closed funding rounds.Now, let's go to Page 4 with the key highlights of the quarter. Our net asset value amounted to SEK55.5 billion, that is up 5% in the first quarter of '23. Samuel will guide you through the development of our NAV in more detail and how the valuations of our private companies have developed in just a few minutes. During the quarter, we also invested significant capital to accrete our ownership in Spring Health and Agreena. Since our first investment in Agreena a year ago, the company has seen very strong growth, increasing its covered land by 10x and expanding its geographic footprint to 16 countries across Europe. They have exceeded our already high expectations in their pursuit to drive the shift to regenerative agriculture. The investments in Spring and Agreena are great examples of how we are seizing the opportunity a slower market generates to double down in the companies where we have the highest conviction and that is also one of our top priorities during 2023. We also added Enveda to our emerging healthcare portfolio, a biotechnology company innovating drug discovery through analyzing natural compounds with large language models. And I will dive deeper into both Spring and Enveda in just a minute.The investment activity in the quarter was more than financed by a full exit of our Teladoc investment, which means we ended the quarter with a net cash position remaining at just over SEK10 billion. Teladoc is the first truly significant full exit from our younger growth portfolio and it's also a key milestone as reallocating capital within our portfolio is a fundamental part of our strategy.But before we move on to the next page, I would like to highlight that Kinnevik has once again been recognized for our leadership in sustainability. We ranked first in the VC category in the Honordex Inclusive PE & VC Index of 2023. We were also rated by Equileap as a top performer in Sweden for gender equality, and these recognitions are a testament to our hard work, our dedication and commitment towards equality, diversity and inclusion.On the next page is an overview of our investment in the Spring Health and some insight into why we have such strong conviction in the company. Spring's ambition is to reshape mental healthcare into treatments tailored to each individual by using big data and machine learning. And since our investment in 2021, the company has seen impressive traction among its customers and grow its revenue by over 7x. We led the round with a $40 million investment and invested an additional $10 million in secondaries from an early-stage investor. And the company is now funded to breakeven. All this means that we have redoubled our investment and accreted our ownership in one of our most promising businesses and done so at a more balanced valuation. This is also what we said we would do at the start of the year. The founders, April Koh and Adam Chekroud are setting a new standard in mental healthcare and we are very excited to continue supporting the journey.Now, moving to Page 6, where we will provide some more details on our exit of Teladoc. Since our first investment in Livongo 6 years ago, our investment has generated an IRR of 55%. This gain equivalent to SEK4 billion has financed our investments into new healthcare businesses since 2020, including companies such as Cityblock, Spring Health, Transcarent, Recursion and most recently Enveda. This portfolio today is valued at around SEK7 billion. As I mentioned before, this is a proof point of the validity of our strategy and shows that our model works, that is to reallocate capital within the portfolio to fund new investments and maintain an attractive portfolio distribution.On Page 7 is an overview of the biotech company Enveda, the most recent addition to our emerging cluster of life sciences investments. Enveda was founded on the belief that the answer to many of our most common illnesses and diseases can be found in nature. Nature has been a source of inspiration in drug discovery in the past, but returns diminished due to limitations in understanding nature's complex chemical makeup. Enveda uses novel machine learning techniques, such as large language models to create a search engine to index and map the chemical components of plants. Today, science knows less than 5% of nature's chemistry and transforming this, our understanding made possible by Enveda's search engine has the potential to improve existing drugs, as well as bring entirely new ones to the market to treat unmet diseases. The company was founded by Viswa Colluru, a PhD in cellular molecular biology and a true visionary. He previously held leadership roles at Recursion, another portfolio company of ours, which he left in 2019 to start Enveda. And in April, we invested $25 million alongside our partner fund Dimension, who was also an early [ backdrop ] of the company. Enveda fits squarely into our emerging life sciences strategy and the investments gives us exposure and access to the technological revolution currently underway in the pharma industry. And while it is an early-stage company, we are impressed by the platform they built and very excited about the potential to create something truly impactful in healthcare.I would now like to hand over to our CFO, Samuel, to go through the private valuations and the development of our NAV starting on Page 9.

[Samuel Sjöström, executive]

Thanks, Georgi. Q1 was, for a change, less dramatic quarter for our private valuations. And that means I'm going to talk to a thinner set of pages than has been the case in the last few quarters. That does not mean, however, that we feel we're providing less information in this quarter, quite the contrary. Now, some of you may already have added time to skim through Note 4 in today's release. For those of you who are less acquainted, Note 4 is the part of our report where we lay out the valuations of our private businesses in more detail. In this quarter, we've made a fair amount of revisions to the section of our report. The objective has been to provide you more information in a less dense and more digestible way. We've been drawing on the data we provided you through a tumultuous 2022 and sought to institutionalize it in our report rather than to provide it in more ad hoc ways in the presentations like the one we're halfway through now. After you'll have the time to go through our report more carefully. I look forward to hearing your feedback and thoughts on how we can continue to improve our disclosure and help your understanding of what we feel is a very exciting set of businesses.With that, on to Q1. In this quarter, an underlying write-up of 2% to 3% translates into a small 1% SEK fair value write-up from last quarter. Adding SEK0.8 billion invested primarily into Spring and Agreena brings us to the SEK1.1 billion increase in the carrying value of our private businesses this quarter, just shy of the SEK30 billion mark.So what's underpinning this small write-up? Well, firstly, we had some support from public market multiples this quarter and valuation multiples in our private portfolio expanded as well by a much more modest figure of around 1%. The difference here is primarily coming from value-based care, where we're dealing with a public benchmark that is in flux after several buyouts. Apart from that, there is some structural multiple contractions stemming from our company's growing materially faster than the average peer and also a few idiosyncratic adjustments to the valuation levels of certain investments.Secondly, we're recalibrating expectations for certain investees in this quarter. Our more B2B focused companies are performing in line with highly set expectations. But as Georgi mentioned, we've noted some incremental softness in some of our consumer-facing businesses, that has caused us to reconsider our growth expectations through a more conservative lens. The effect on our portfolio of these revised expectations is continued strong growth and a rolling NTM outlook that is increasing, but not necessarily increasing at a level that we expected a quarter back. And that one-off adjustment is holding this quarter's write-up back a bit.From a more technical standpoint, contrary to the last few quarters, liquidation preferences brought a negative impact to our fair values this quarter as we "amortize" the accrued effect on preferences, down from SEK3.2 billion to SEK2.9 billion or around 10% of the total carrying value of our private investments. As we lay out in today's report, this effect is fairly concentrated as 75% of this accrued difference relate to 5 relatively mature and well-funded investments representing around SEK4 billion of fair value. So, in total, the NAV we post today entails a small write-up held back by some slight headwinds in consumer-facing businesses and a fair amount of caution on multiples with contraction relative to public peers.Now, us taking a more cautious approach is manifested in the clearing prices we're seeing in our private market. Broader market indicators suggest the funding environment, that again decline quarter-on-quarter, but nevertheless, we had 6 funding rounds in our portfolio in Q1. On average, these rounds were concluded at valuations almost 50% above our underlying Q4 marks. So as we said in Q4, the concept of a public-private valuation gap may be a phenomenon in the broader market from a macro point of view as companies delayed their repricing, but it does not seem to exist in our NAV when these repricing events actually materialize. And I think that speaks to the benefits of our permanent capital model in this type of volatile market. We swallowed a lot of bitter pills last year when writing down the underlying value of our private portfolio by around 50% on average. But this also means we entered 2023 with a set of valuations that reflect the current reality rather than that of a company's last funding round. And this means we can operate in a free and in a rational way focused on creating value rather than on sunk cost and protecting the last headline valuation.With that, I'd like to touch briefly on the handful of more material valuation revisions we're making this quarter. And that means we're on Page 10. I mentioned the buyout activity in value-based care, which is something that has been going on over the last 6 months and that's caused the best public benchmarks for our value-based care businesses to be taken or be on the cusp of being taken private. And that's why we're being careful and expanding our multiples by low single-digit percentages in our two large value-based care businesses, VillageMD and Cityblock, even though public benchmarks have expanded more aggressively. Nevertheless, even with this caution, we're rising our both investments with around 10% this quarter. For VillageMD, that means we're virtually valuing in line with where last quarter's transaction took place up from a 10% discount in Q4. And for Cityblock, it means we're valuing the business at a similar discount to VillageMD as the one we've upheld since mid-2021.Georgi mentioned the funding round at Spring, which is the key achievement against our priorities this year. As far as valuation goes, we're valuing the company in line with where this round took place. That means, the 25% write-up of our stake before taking into account the new capital we put to work. Even so, our forward revenue multiple expands by no more than around 10%, and this is roughly in line with the average movement in the public peer group in the quarter and means that our multiple is down more than 40% compared to where we were a year ago, and almost 70% from where we concluded our first investment back in September '21. Now, this investment delivering 25% value appreciation during a period of 70% multiple contraction is an indication of what we've been saying in the past, namely that the key long-term valuation risks in our portfolio revolves around execution and operations rather than around valuation multiples.On the other side of the spectrum, we're taking down our valuation of Instabee by 15% in the quarter. E-commerce in the Nordics is slowing, and while Instabee continues to show strong growth and gain market share, this has implications on short-term expectations on top line and therefore, also on our valuations from a quarter-on-quarter perspective.At Monese, the other large write-down this quarter, we've revised our expectations on the company's investment needs as it continues to pivot its revenue mix from B2C to B2B. This impacts our valuation negatively in the short-term until we have a clear financing path and it's effectively what causes the 35% write-down in the quarter.So, as mentioned in aggregate, the slight weakness this quarter is primarily coming from our B2C businesses. Looking at the underlying valuation changes, we're writing up our more business-facing investments by around 6% in the quarter, while we're writing down our consumer-facing businesses by almost 10%. The net effect of that were around 3/4 of our carrying value falls into the business-facing category is what adds up to the 1% fair value write-up this quarter.Moving on then to Page 11 and adding the development in our public investments. We exited Teladoc slightly above where it closed the first quarter and a few hundred million SEK above where it closed Q4. And Tele2 had a strong quarter, trading up by more than 20%. And this causes our NAV to be up by 5% in total in Q1, ending up SEK55.5 billion or SEK198 per share. SEK10.5 billion of that NAV is in net cash as we're ending this quarter with an even stronger financial position than we started it.And to give you some more sense of what type of context we're expecting to deploy that capital, let's move ahead to Page 12. All right. So in past quarters, we have shown you our runway estimates for our portfolio. Those remain largely the same with some incremental improvement stemming from the fundraises concluded in the quarter. But looking at the uses of our capital through a different lens, what we're showing on this page is the different backdrops to our forecasted follow-on investments in 2023. Now, to recall, our expectation for 2023 is to deploy around SEK5 billion in total, split roughly 50-50 between new investments and follow-on investments into our existing portfolio. Out of the follow-on half of these SEK5 billion, more than 70% is forecasted to be deployed in rounds or transactions were instigating ourselves or where we're going to attempt to invest more than our pro rata share. And you've seen examples of that this quarter at Spring Health and at Agreena. Less than 20% were follow-on forecast is in rounds that are planned for this year in more emerging businesses and where we're targeting pro rata participation for the time being. Now the remaining 10% or so or call it around SEK250 million is our forecasted deployment into investments where we're seeking to minimize our participation for various reasons. But where we still believe us providing additional capital is preferable to the potential alternatives available.So, what could make us underperform against these expectations? Well, we do not believe us being dragged into rescue financings in some of our less performing more troubled businesses is a factor here, rather we see 2 different circumstances having the potential to affect the ultimate outcome. Firstly, we may not be able to deploy as much capital as we would like to -- into our existing high conviction businesses, either because of competition on the demand side or because of lack of supply as valuations we find attractive. All else equal, that will push the SEK5 billion and the percentage share of follow-ons downward. Secondly, it may be that the current market environment makes it harder for us to find enough attractive new opportunities to invest in. Georgi has mentioned before, the importance of not letting the bar for a great investment subconsciously creep downward because of a lack of supply and itchy fingers and we do not know for sure whether the market will pick up enough steam for us to find sufficient opportunities to deploy the SEK2.5 billion we're expecting to deploy into new investments this year. Not managing to source and execute on new opportunities would naturally push to SEK5 billion downward, as well as the percentage share of new investments. Again, all else equal.So to sum up, our financial position is strong. We're beginning to materialize opportunities to accrete in our highest conviction companies during a period of more balanced valuations and we're working hard on shifting out new opportunities in a less intense fundraising environment such as our Enveda investment announced today.With that, I'd like to hand it back over to Georgi for his concluding remarks.

[Georgi Ganev, executive]

Thank you, Samuel. Let's now go to Page 15 to take stock of our priorities and expectations for 2023. Kinnevik is a truly long-term investor, which is becoming increasingly valued by our founders. The market backdrop will likely continue to be volatile and difficult to navigate for some time to come and financial resilience is vital. That said, it's our responsibility to continue supporting and pushing our companies to remain aggressive, challenging and innovative. This will ensure that their customer offerings remain relevant, not only in the next quarter, but for the next 10 years.During the first couple of months of 2023, we have remained disciplined in our capital allocation and end the quarter with a stronger net cash position that we entered it with. With our investments into Spring Health and Agreena, we've taken the opportunity to double down and accrete our ownership in the businesses where we have the highest conviction. And we have done it during a period of more balanced valuations. We are also actively working with our more challenged investments and believe no more than around 10% of our expected follow-on investment this year will go to companies where we seek to minimize our commitment as we heard Samuel go through. With Enveda, we're also proving our ability to source and execute on new exciting investment opportunities in a slower venture and growth markets. And we hope to repeat these achievements throughout 2023.We are as ever grateful to our shareholders for the strong support as we continue executing on our shorter-term priorities, and our longer-term strategy. And we look forward to meeting many of you at our Annual General Meeting in Stockholm on the 8th of May.With that, we are now ready to answer your questions. So, operator, please open up for Q&A.

[Operator]

[Operator Instructions] Now we're going to take our first question, and the question comes from the line of Joachim Gunell from DNB.

[Joachim Gunell, analyst]

So it makes total sense in terms of being more dynamic in your capital reallocation to make this final sell-down in Teladoc at also attractive returns. But can you comment here a bit on the timing with regards to the fact that you already had a quite sizable net cash position in Q1?

[Georgi Ganev, executive]

Joachim, thank you for your question. Yes, of course. I mean, I think for us it's about also managing the entire exposure to the healthcare sector, right? We invested in virtual care already in 2017 and we have expanded our exposure in that sector. Now, what we have seen in the last years, we have been focusing more on niche players such as Quit Genius, Spring Health to name a few. And we've also grown into the area of more kind of life sciences investments with Recursion and Enveda. So it's not only our ability to demonstrate a full exit and redeploy capital, but also to slightly skew the exposure within the healthcare sector.

[Joachim Gunell, analyst]

And for Samuel then, can you just comment a bit on the fact that you actually apply a 10% discount, if I understand correctly into the valuations at which you -- which 6 of your holdings raised capital here in Q1 to have further prudence, I would assume, but what's the reasoning there?

[Samuel Sjöström, executive]

Yes, you're right, Joachim, we're at 10% discount relative to the last headline valuations on a valuated basis. Look, I think, this is a case-by-case assessment. It's guided by parameters. I think you understand are relevant, such as internal or external participation, size of the round, and then also clearly potential structural considerations. But on top of that, sure there is some overall conservativeness in that assessment as well. And as you see, for instance, with VillageMD, we were at a 10% discount last quarter and now we're sort of caught up. So, we like it that way.

[Joachim Gunell, analyst]

Great. And then just finally then, I would assume that the Q1 2023 results mark the, call it, end to the 5-year long-term incentive program announced that when you initiated this growth you got in 2018. So can you just comment a bit on what the IRR or call it, return on invested capital in your unlisted portfolio have been over the past 5 years?

[Samuel Sjöström, executive]

Sure. So, as you recall, Joachim, 5 years ago, our unlisted portfolio was very exposed to a set of emerging market businesses. You'll remember, Bayport, BIMA, Quikr and so forth. Those have developed, let's be honest, extremely poorly over these last 5 years, and that's been holding the IRR in the private portfolio down quite a bit. As we've let you know in connection with the Q4 results, if you look at the IRR on the portfolio, we've actually built over the last 5 years in the developed markets, that IRR is steady at around 30% since inception.As it relates to the LTIP program, that fairly significant write-down on the emerging market portfolio means that there is no shares vesting in that program. But if you want to talk about the performance of the strategy, then I think 30% IRR is more relevant over the last 5 years. But again, we were incentivized also on protecting value in the emerging market portfolio we inherited, and we failed doing so.

[Operator]

Now, we're going to take our next question. Please standby by. And the next question comes from the line of Derek Laliberte from ABG Sundal Collier.

[Derek Laliberte, analyst]

I was wondering if you could talk a bit about this strategic investor in Cedar sounded pretty interesting. And also if you could sort of give some flavor around the drivers behind the company's strong performance of late?

[Samuel Sjöström, executive]

Sure. Hi, Derek. I'll start on Cedar. It's a fairly small investment, at least in comparison to the valuation of the company from a non-profit health plan in Texas, if I'm not mistaken. We're sort of disregarding that investment. It's virtually an extension of the company's 2021 round. We feel like perhaps price has not been on the top of the agenda when discussing that investment in the context of a broader partnership. So, we stick to our model rather than to let that extension investment calibrate our valuation of Cedar.

[Georgi Ganev, executive]

Yes. That said, I would like to add that we see Cedar's position being very strong still. And the kind of the future prospect of the company's growth is more than basically even better than our expectations.

[Samuel Sjöström, executive]

Yes, sorry. Derek, I just realized, just to be very clear, that extension investment in Cedar is not included in the numbers we're giving you as far as differences between headline valuations and our valuations go.

[Derek Laliberte, analyst]

Okay. Yes, that's clear. And then, I'd like to wonder I think you maybe were clear on this already. But when it comes to the overall healthcare segment and your investments here. I mean, is it fair to say that you're basically done with value-based care when it comes to new investments and perhaps also virtual care and that the main focus is on emerging life sciences? Because, I mean, you obviously made the Spring Health and Parsley Health follow-ons here and they're quite new investments, but those were follow-ons. So I think you're thinking in terms of new investments as you calibrate your exposure.

[Georgi Ganev, executive]

I think done is a strong word. But nuance that I think the exposure today we have on value-based care is balanced. We have exposure, as you know, in VillageMD and also Cityblock, different populations, both companies performing. And we also have Babylon with exposure to value-based care. So I think for us now, it's about distributing the portfolio according to the larger trends and the best opportunities we see. And as we've said before, the opportunity within drug discovery in companies like Recursion and Enveda are extremely fascinating and we are super happy with those 2 new investments and might be more coming.

[Derek Laliberte, analyst]

Cool. And finally, from my side, I was wondering if you could just remind us about the investment case in your public investment here in Recursion, which was sort of a special situation with investing in a public company as sort of the first investment because from the outside that it may assume like you followed Baillie Gifford on this one, and the stock has been really bad pro forma rate. So just to get your perspective there would be great.

[Georgi Ganev, executive]

Okay. First -- thank you, Derek. I mean, first of all, this is a company we knew from a long time ago and we have followed it. We kind of missed the opportunity when it was private. It went -- then went public, trading at higher multiples like a lot of things in 2021. We then saw the opportunity when the company did a pipe transaction. So, basically in the public market, but the opportunity for us is a private investor to go in there and actually do a primary investment. So in these businesses, of course, we are -- it's possible for us to accrete ownership in the public market, but the ability to provide primary capital to that type of businesses is much more interesting to us. So the fact that Baillie Gifford had a relationship with them was obviously helpful to us because we know them well and we could again cross-reference and triangulate these founders and to understand much better the strength, the opportunities, but also the challenges of the business. But it just confirmed our underlying thesis that we had built up for quite some time. Therefore, we are super happy with that investment.In the short-term, I, of course, agree with you. The stock has not been trading positively. But we think that is the short-term. It doesn't change our long-term view of the business.

[Derek Laliberte, analyst]

Great. That's very helpful on the background there, I wasn't aware.

[Operator]

Now, we're going to take our next question. Please standby. And the next question comes from the line of Johan Sjoberg from Kepler Cheuvreux.

[Johan Sjöberg, analyst]

I would like just to continue on the value-based care business and have you changed your assumption in terms of competitive landscape or the long-term growth outlook or just want to hear your thoughts about how you view this segment?

[Georgi Ganev, executive]

No, we haven't. I think what we've seen during the last 18 months is, again, a volatile market with valuation going up and down. I think that is the impact we see. Actually, underlying a business operationally, we're seeing basically these -- both of our companies performing. And if anything, I think it's just going to be fewer companies that really can crack the code in these difficult populations, especially around Cityblock. So, we haven't changed our view on the long-term prospect.

[Johan Sjöberg, analyst]

Great. When it comes to VillageMD, I mean, it's quite a sizable share of value-based care, but also actually the [ holding ] unlisted portfolio, you've seen a couple of the sales in this -- over the last years. What is sort of the long term? How should we view VillageMD? Is this sort of a [ holding ] which you're about to sort of pace out or are you in line with what you're talking about your capital reallocation within the portfolio?

[Georgi Ganev, executive]

As we've said before, we have previously sold down in VillageMD and I think it became obvious when Walgreens Boots Alliance became the majority shareholder that our tenure as active owner was going to an end, right? But also we're super happy with that partnership and that ownership, because it also makes the possibility -- makes it possible for VillageMD to grow in a better way. But, of course, it's a smaller investment in terms of ownership size for us, but a large investment in terms of fair value. So, yes, it could be a potential target sometime in the future for capital allocation -- reallocation.

[Johan Sjöberg, analyst]

Thanks for your honest answer there, Georgi. And just coming back also, follow-up on your capital reallocation and your 2023 expectations yet. Just talking about these 70% high conviction businesses, could you give some sort of indication which sectors we are talking about here, which is sort of where you -- of course, we've got some lead from Spring Health, but going forward where do you see it?

[Georgi Ganev, executive]

I would argue that we have those type of businesses in all our sectors. It's difficult to name a few because then you will ask questions about the ones that are not naming. But I think there are businesses typically that have -- they have proven their ability to handle difficult times, strong leadership from the CEO and founder, the ability to demonstrate that the business model works with underlying, either strong margins or a very strong efficiency, high efficiency. And I think that all in all, makes us convinced that these companies will be digital winners in their respective sectors. And we have those type of businesses. We would like to, as I've said before, almost kind of protect them for not cutting costs too much or slowing growth that much, but rather actually want to preempt the potential round to make it possible for them to continue to grow and take market share. And that's really what we've done now in Spring Health and Agreena. I think Spring Health being a bit different because they have funded now to breakeven. We are very certain that the model works. We are super convinced about the team. So that we can demonstrate as a long-term bet.

[Johan Sjöberg, analyst]

Okay. And also on your comment upon the 10% minimized participation is driving a low [ commission ] businesses. What is this really? I mean, it's -- you could interpret it like you are throwing good money off the bad monies because it seems like you have some businesses which obviously is driving. And I think earlier when we talked about this, you said that we're not going to invest into businesses which we don't -- we have no obligations basically to invest into business which we don't believe in. Here, it seems like you're actually thinking about doing that or am I reading you wrong here?

[Georgi Ganev, executive]

No, but I think we want to be transparent and honest. Of course, there's a sliding scale, right? Businesses that we don't believe in or don't believe we have a future in, we won't invest at all. That's for sure. These businesses are the ones that are in some sort of borderline where you would argue that deploying more capital -- limited capital into this business, whether they protect or create more value than let to go robust. So for us, if the alternative is something that is worse, we, of course, we will look at deploying capital, but only in a very disciplined manner, right? So, every decision will be taken with the backdrop that what is the alternative. So it's not that we will end up deploying money in companies we don't believe in, but we have, of course, businesses that will have slightly less conviction or a lot less conviction compared to some of the stars in the portfolio. That will always be the case.

[Johan Sjöberg, analyst]

Perfectly clear. My final question, you said SEK5 billion investments this year. When you're looking into next year, is it -- I know it's early days, but have you seen some sort of -- could you give some sort of indication about the investment base? Will it be higher, lower, same size? What do you think?

[Georgi Ganev, executive]

I think we have no reason today to adjust. But as Samuel said, there is obviously a risk that this market makes it more difficult for us to deploy the capital we foresee to deploy in the high-performing businesses. It might also be kind of less opportunities, we look at many companies but we end up investing in just quite a few. But having said that, if we amount the money we have deployed just in Agreena and Spring Health, that is around SEK700 million. And then Enveda -- in Enveda with another SEK25 million, so a bit more than SEK250 million, that's just in the first quarter mentioning those 3. So, I think we have -- we have already demonstrated at the beginning of this year that we have the ability to keep up the investment momentum. But again, we are -- this is not the kind of budget that we need to keep. If we don't find the best opportunities, we will save that money for next year.

[Operator]

Now, we're going to take our next question. Please stand by. And our next question comes from the line of Rasmus Engberg from Handelsbanken.

[Rasmus Engberg, analyst]

I was just coming back to VillageMD. What is the expected revenue for this year, roughly? Such a big part of your values and thought it would be interesting to know that.

[Samuel Sjöström, executive]

Sure. Hi, Rasmus. I think we pointed out in today's report in Note 4 that we're expecting Village to grow by around 35% this year. That's clearly lower than what was the case in 2022 and that's driven by the acquisition of Summit Health, which is a more mature player. And you also see in our report today, I believe that we're expecting the company to be profitable on an EBITDA basis this year.

[Rasmus Engberg, analyst]

Yes. What is the actual revenue, that's the question?

[Samuel Sjöström, executive]

Let's stick to the growth rate for now. And let's see if we can pick up on the actual revenue offline, Rasmus.

[Rasmus Engberg, analyst]

Okay. Cool. Very good. I also wanted to ask you just, you have provided a kind of a new slide in the report or rather you've updated a slide to not give a range of what the valuation is on Page 6 in the quarterly report. I was just wondering whether that is only actually the unlisted assets in there. Or does it include things like Babylon and Recursion when we talk about [indiscernible] valuation, just for clarification?

[Samuel Sjöström, executive]

Yes. Good question, Rasmus. That depends on whether you're on Page 6, or if you're back in Note 4. On Page 6, the metrics we're showing is the full portfolio, meaning that Babylon is included in value-based care. If you're in the Note 4 version of that table, then it's only the private businesses.

[Rasmus Engberg, analyst]

And then just finally, how -- after these banks collapse, especially in California, how is the market -- is the market sort of stabilizing after that? Or are we still waiting? Or are people sitting on their hands? And what is the general behavior in the market if there is any to talk about?

[Georgi Ganev, executive]

Like generally, of course, it's still a very volatile market and we foresee the water to be quite choppy for the remainder of 2023. But having said that, we also see signs of investors looking more at the fundamentals. As Samuel mentioned, we've had 6 fundraisers in our existing portfolio to valuations that have been priced half of them by externals on an average 50% higher than our book value. So, of course, that in itself is some kind of signal of things that investors are willing to take risk. Again, they're looking at the underlying performance rather than just speculating whether Fed will increase or decrease the interest rate. So I think that although we've seen a very volatile Q1, we have, at the same time, a feeling that the investor space is opening up again.

[Rasmus Engberg, analyst]

These 3, that the price by external, whether they were before the bank collapses, right?

[Samuel Sjöström, executive]

Sorry, Rasmus, before the bank collapses?

[Rasmus Engberg, analyst]

Yes, the question was...

[Samuel Sjöström, executive]

I'd say there -- I mean, it's a mix. It's not -- we're not necessarily seeing an effect from the bank collapses on how rounds are being priced, Rasmus. If that's what you're saying?

[Rasmus Engberg, analyst]

Yes, that was the question really. If the market participation slow down or something.

[Samuel Sjöström, executive]

No, we haven't.

[Operator]

[Operator Instructions] Now, we're going to take our next question. And the question comes from the line of David Johansson from Nordea.

[David Johansson, analyst]

Just 2 questions from me. The first one being related to Teladoc and the second one with respect to cash burn. So adding to the previous question on the timing of divesting Teladoc, would you say this is mainly an effect of seeing attractive investment opportunities in the market? Or would you say this is more an effect of extending your own investment runway and that you see maybe a need to bridge financing in the companies here in the short- to medium-term?And then the -- then on to the second question, looking at cash burn. On Page 9 in the presentation, you show that cash burn is having quite large negative impact in the quarter. So if my calculation is right here, the negative effect should be around SEK600 million from Q4. Could you elaborate a bit more here what's the underlying dynamic is in the companies? You have mentioned previously that cash burn should decrease by around 40% this year compared to last. So, is this target still intact? And could you say anything more about the current burn levels in relation to Q4? I'll stop there.

[Samuel Sjöström, executive]

All right. David, it's Samuel. I think on Teladoc, let's be very clear. The reason why we sold our shares in Teladoc is because we don't necessarily find it long-term attractive. We find a business like Spring Health considerably more attractive from a long-term perspective, and that's why we're moving our capital out. And it's very likely that that stock has a short-term bump as the market in general sort of gets a bit more positive, but we couldn't care less, to be honest. It's about the long-term case and where we lost belief in that, and that's why we sold out.As it relates to burn, no, there is no changes in sort of expectations around burn relative to Q4 other than, again, there is some incremental burn coming from growth being a bit lower than expected in the more consumer-facing businesses. So, maybe if it was -- the specifics of your question, could you perhaps repeat that as far as burn goes?

[David Johansson, analyst]

I thought it was just a bit higher, I think if I remember correctly, it looks a bit higher compared to the previous quarter. So I was just wondering if the -- if there is maybe incremental change there from previously. But all right, that's all from me then.

[Operator]

[Operator Instructions] Dear speakers, there are no further questions at this time. I would now like to hand the conference over to --. Please accept my apologies. We just came through one more question. Gentlemen, just give us a moment. And we have the last question comes from the line of Oskar Lindstrom from Danske Bank.

[Oskar Lindström, analyst]

Regarding the Silicon Valley Bank failure there and the turbulence in general in these banks. I mean, you came out with a press release sort of on your actions at that time. Is this having any longer-term residual effects on cash management? How you finance your companies? Or your view of where your own balance sheet should be?

[Samuel Sjöström, executive]

Sure. Hi, Oskar. No, I mean, as you can imagine, counterparty risk and yield management is a lot higher on the list of to-dos at our companies relative to before this -- the collapse of SVB. So now we're very cautious of where our company store their cash, and also having them understand that if you've raised a lot of capital, you can't just let that sit in cash accounts. You need to manage your yield in this type of environment. So that's as far as [ investees ] goes.As far as sort of the Kinnevik level of cash management, we have a very diversified set of bank relationships already with the larger Nordic banks. We have some cash in sort of at hand to cover our costs and then we have the rest in the mix of deposits and money market investments, again, with all the larger Nordic banks.

[Georgi Ganev, executive]

Thank you very much for listening and for your questions. And as a last reminder, we will report the results for the second quarter of 2023 on the 11th of July. Thank you very much. Bye-bye.

[Operator]

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.