RIT Capital Partners Plc, a prominent UK investment trust, has recently made significant markdowns on its investments in various cryptocurrency startups. The trust, founded by Jacob Rothschild, had previously allocated substantial amounts of capital to crypto firms, along with supporting numerous technology startups. However, in its 2022 annual report, RIT revealed a reduction in its positions in Animoca Brands, Kraken, and Paxos.
While the exact cause for the markdown is unclear, it is unlikely that RIT sold off any of its stakes, as the three startups in question are privately held. RIT’s chairman, Sir James Leigh-Pemberton, explained in a note that the correction in public and tech markets led to a portion of their significant gains being written down. He also emphasized that RIT’s private investments are intended to be long-term commitments, allowing the trust to avoid forced sales to fund redemptions.
When approached for comments, RIT, Kraken, and Paxos did not respond immediately. A spokesperson for Animoca Brands declined to provide a statement. This development coincides with a broader reevaluation of the valuation of crypto startups and technology firms following a period of exuberant venture capital investment throughout 2021 and 2022.
In a related development, Molten Ventures Plc, based in London, recently devalued its stakes in Revolut, a fintech and crypto business, and crypto security firm Ledger. The devaluations amounted to 40% and 22% for Revolut and Ledger, respectively. This adjustment comes after Revolut achieved a valuation of $33 billion during its last funding round in mid-2021.
These markdowns reflect the ongoing recalibration of investor sentiment towards crypto and tech startups, signaling a shift away from the exuberance observed in previous years. As market conditions evolve, investors are reassessing the risks and potential returns associated with these sectors, prompting adjustments in the valuation of their investments.
