SUMMARY
Bank of America in a note said that the startups in SoftBank’s India portfolio did a "good job" in cutting costs materially in the last six-nine months
As the startups have increased their focus on cost-cutting measures, it has resulted in reduced growth rates of 15-30%
Around 94% of SoftBank's investee companies now have at least a 12-month cash runway: BofA
About 50% of Indian startups in the portfolio of Japanese investor SoftBank are close to breaking even or above it, as per a note by investment bank Bank of America (BofA).
The portfolio companies did a ‘good job’ in cutting costs materially in the last six-nine months at a time when startups are grappling with a funding winter amid macroeconomic headwinds, Moneycontrol cited BofA as saying in the note.
As the startups have increased their focus on cost-cutting measures, it has resulted in reduced growth rates of 15-30% compared to their previous growth rate of 60-80%, it said.
Despite the slowdown in the growth rate, the cost-cutting measures have helped SoftBank’s startups increase their cash runways. As per BofA, around 94% of SoftBank’s investee companies had at least a 12-month cash runway at the end of March 2023.
Softbank’s India portfolio includes listed startups such as fintech major Paytm, logistics player Delhivery, foodtech platform Zomato, PB Fintech, the parent company of insurtech startup Policybazaar, among others.
The listed companies in its portfolio together added over $100 Mn to SoftBank Vision Fund 1’s (SVF1) books in the quarter ending March 2023.
SoftBank is also an investor in startups like Globalbees, OYO, Ola, Flipkart, Meesho, and Lenskart. In terms of investment deals, India is the third-largest market for SoftBank after the US and China.
SoftBank’s Vision Fund saw its loss increase to 4.3 Tn Yen ($32 Bn), up over 68.7% year-on-year (YoY), in the fiscal year ending March 31, 2023.
Meanwhile, the Indian startup ecosystem continues to see funding crunch as the funding raised by startups declined 66% YoY in April to $888.45 Mn. On similar lines, the number of funding deals plummeted 60% YoY to 61 last month.
However, despite the funding winter, VC, angel and PE investors have so far this year announced 32 funds worth more than $3 Bn to support Indian startups at various stages.
