Legal tech firm Farewill has seen its valuation slashed by more than £50 million by one of its major shareholders, the Standard has learnt, amid growing signs European tech firms are struggling to hold on to the heady valuations they attracted during the height of the pandemic.
Media company Daily Mail and General Trust (DMGT) cut its estimate of the value of its 4.3% stake in Farewill by two-thirds, accounts filed with Companies House today show, implying a valuation drop from £86 million to £30 million.
DGMT first invested in Farewill, which provides online will writing services, back in 2018, and has struck deals with Farewill to place advertising features on the Daily Mail website. Other investors include co-founder of Zoopla Alex Chesterman and Wise co-founder Taavet Hinrikus.
Farewill CEO Dan Garrett told the Standard: “Farewill is on course to generate record levels of revenue and growth this financial year. The market opportunity remains as strong as ever and we are the best placed player to disrupt the £5bn end-of-life market.”
It comes as research found valuations of European tech firms continued to decline in 2023 as start-ups battled for survival amid weaker consumer sentiment, scant venture capital investment and slower growth.
The median venture growth deal value declined 17.4% in the three months to end September compared to the same period 2022, according to data from PitchBook, while median valuations slumped by 26.1%. The proportion of ‘down rounds’, in which a firm accepts investment on worse terms than in previous funding rounds, increased to 21.3% from 14.8%. Since the start of 2023, scores of tech firms from food delivery business Gousto to fintech giant Revolut have seen their valuations cut by investors.
PitchBook said the downturn reflected a change of investor sentiment in which “valuations, particularly at mature financing stages, are facing renewed scrutiny.”
The Daily Mail owner also cut the value of its stake in fledgling magazine Air Mail by nearly 50%, as well as another of its tech investments, London fintech business Plum, implying a £65 million fall in value to £30 million.
But Plum said it had since raised fresh funds that implied a higher figure.
A spokesperson said: “Plum recently entered into a strategic partnership with leading Greek financial institution, Eurobank, that included a minority equity investment of €10m, the first tranche of €5m having happened in November 2023. This valued Plum at £107m, in line with our Series A when DMGT invested.”
A DMGT spokesperson said: “For all of its minority investments, DMGT has consistently applied a prudent set of assumptions when assessing the carrying value of each of these investments, this is particularly prevalent during periods of economic uncertainty.
“The value recorded of each minority investment that DMGT owns, is not to be considered as a reflection of its continued support and commitment to the Venture DMGT has invested in.”
