On a Thursday results call, SoftBank’s CEO Masayoshi Son hinted that the company may reduce its startup investments this fiscal year (FY 2023) by more than half. Son is the latest well-known investor to express strong caution about chances in the private markets amid a global recession. The decision was made in response to the Japanese conglomerate’s poor performance in the previous year, which saw a record loss of $20.5 billion announced at its Vision Fund business for the year ended March 31. A year prior, the company had reported a record quarterly profit.
According to a business translator, Son said: “Compared to previous year, the number of new investments will be half or might be as tiny as quarter.” This relies on our LTV levels and investment prospects, and we strike a balance. SoftBank, the biggest and one of the most powerful investors in the world, joins a group of investors this year that have slowed down the pace and quantity of cash they spend in startups, including Tiger Global, Coatue, and Dragoneer.
Son said that the company’s recent “safe driving” mode has helped it better its financial situation. The company, which has increased its aggressive investments in growing countries like India in recent years, has been on this mode. For instance, the company invested over $3 billion in India last year and intended to invest up to $5 billion there this year. The company invested just $2.5 billion in the quarter that ended in March of this year, a considerable decrease from the amounts it had invested in earlier quarters. On the earnings call, he added, “You open an umbrella when it rains.”
Several businesses, notably Chinese ride-hailing behemoth Didi, South Korean e-commerce startup Coupang, and Chinese online property provider KE, are responsible for the historic loss. Rajeev Misra, chief executive officer of SoftBank Group, stated that the fund has invested $3 billion in Indian companies this year and can invest $5 billion to $10 billion in the following year.
This is the latest aggressive move by a top investment firm in the South Asian country, where young companies have raised more than a record $20 billion this year. At a virtual conference on Thursday, Misra stated, “If we discover the right firms, we may spend $5 billion to $10 billion in 2022,” with the qualification that SoftBank will look at such prospects “at the right prices.”