SoftBank’s approach to making investments in startups could come up for review internally as the Japanese company is coming to terms with the huge losses it posted over the last few months following the debacle at WeWork and the Uber IPO not producing the results it would have expected.
The immediate ramifications, as far as the Indian startups are concerned, are that there are at least two startups, Lenskart and Dailyhunt which have been waiting for funds from SoftBank, out of its Vision Fund II of $100 billion.
Reports now suggest are doubts if the Japanese investor may be able to raise the full quota of $100 billion for its second fund and may be one of the reasons for the delay in remitting the $300 million in Lenskart and $200 million in Dailyhunt. The deal for these investments were concluded six months earlier.
For the record, SoftBank’s Vison Fund 1 completed its term on September 12 and as a standalone fund, it incurred a loss of $9 billion. The overall loss by the company in the quarter ended September 30 was $6.4 billion. These and the failures at WeWork and Uber may result in SoftBank difficult to convince its current investors or fresh ones to trust their funds with its Vision Fund II. A
large portion, of $60 billion for the Vision Fund I had come from Saudi Arabia’s Public Investment Fund and Mubadala Investment Co a sovereign wealth fund from Abu Dhabi. Reports say they may pitch in again, but the amounts may be much smaller than the last time.
Coming back to the Indian context, the Japanese investor has not picked up any new venture in the country for making investments, throughout this calendar year. Whatever funding has occurred has been in the form of additional funds provided to ventures where it already holds a position. These include Delhivery, FirstCry and Ola Electric.
Despite the foregoing, SoftBank seems to be strengthening its presence in the country with new recruitments being made here in the investment department. A six-member team to pick investments has been put in place.
The general sense is that this investment team may be given a brief to look for early investment opportunities. As for the companies where SoftBank has already invested, the CEO of SoftBank has advised them to work towards making their ventures profitable.