It could turn out to be a not as great a year for India’s leading tech start-ups as Japanese investment giant SoftBank, which minted many unicorns last year, has decided to scale down its investments in FY23 and for the next fiscal as well. The announcement comes on the heels of SoftBank posting a record $13 billion annual loss in FY22 with some of its major portfolio companies, which listed in public markets, seeing a significant drag.
SoftBank’s CEO Masayoshi Son said that the investment giant is right now “on a defense mode” and will adopt a stricter investment criterion going forward. Son, however, said that he believes in the evolution of technology, but as of now there is a greater need to adopt financial discipline as of now.
“We may not see any addition to our existent portfolio of 475 companies in FY23 but we are hopeful that the IPO markets will recover in next few years and we will switch to offense mode,” Son told the reporters during a media briefing on Thursday.
He added that while the investments from SoftBank peaked in the Q1 of FY22, they slowed down in Q4, FY22 as the tech stocks saw a rout the world over.
Notably, shares of some major companies in Softbank’s portfolio, including South Korea’s Coupang Inc. and China’s Didi Global, have tumbled by more than 50 per cent in Q4 FY22, thereby eroding billions of dollars from Softbank’s portfolio.
Indian companies Paytm and PolicyBazaar also found a mention in the Softbank’s earnings presentation. As per the report, Softbank had invested $1.4 billion in Paytm, which has a fair value of $800 million, now whereas an investment of $400 million in PB Fintech (PolicyBazaar’s parent firm) has a fair value of $100 million currently.
Data collated from research firm Venture Intelligence shows that in 2021, Softbank remained the top investor in the Indian start-up ecosystem when it came to writing big cheques for companies, with the Japanese major having invested $1.57 billion last year. The investment giant has ploughed in over $14 billion in Indian companies so far.
Meanwhile Indian markets crashed on Thursday morning in the face of a global economic slowdown and inflation concerns. The tech stocks, particularly, have been witnessing a free fall with the valuations of the firms at a record low since their listing.
Copyright©2022 Living Media India Limited. For reprint rights: Syndications Today