SUMMARY
Although, the Japanese investment major had earlier adopted a wait-and-watch strategy, but, now, it is actively looking to invest in new-age companies and strengthen its portfolio in the Indian market
SoftBank which usually invests over $100 Mn per round will continue to do so, particularly in growth-stage investments
SoftBank has funded nearly a fifth of India’s 100+ unicorns
Japanese conglomerate SoftBank is reportedly preparing itself to invest in Indian startups again, after a dry spell of nearly 18 months.
SoftBank will be resuming signing deals with Indian startups shortly, Moneycontrol reported, citing Sumer Juneja, head of India and EMEA at SoftBank Investment Advisers.
Juneja’s statement comes close on the heels of investors across the board tightening their purse strings and treading cautiously on the companies they are seeking to invest. Even, late-stage backers like Tiger Global, Prosus and Alpha Wave have also remained on the backfoot.
Although, the Japanese investment major had earlier adopted a wait-and-watch strategy, but, now, it is actively looking to invest in new-age companies and strengthen its portfolio in the Indian market.
Juneja told Moneycontrol that in 2022 and early 2023, investors, especially the early-stage ones, focused on preserving portfolios during the funding slowdown, leading to reduced deal-making. As seed and Series-A/B deals increased in the second half of 2023, the growth investor pipeline is expected to rise.
However, 2024 will be different from previous years as founders will now come to terms with a reset in valuations and will be open to repricing themselves as they seek to grow and tap market opportunities. Cheque sizes at the growth stage could also moderate after founders undertook various measures to reduce costs.
“We will do smaller cheques only if the market dynamics require it, especially since companies have become more capital efficient and want to raise less. We will be fine investing $50 Mn, but ideally not lower than that. An investment below $50 Mn will not move the needle for SoftBank,” said Juneja.
SoftBank which usually invests over $100 Mn per round will continue to do so, particularly in growth-stage investments.
Having funded nearly a fifth of India’s 100+ unicorns (startups with valuations exceeding $1 Bn), SoftBank has invested a total of $15 Bn in India.
In a recent development, it sold stakes worth $1.8-1.9 Bn during the public offerings and through post-listing sales in four Indian startups — Paytm, Zomato, PB Fintech, and Delhivery — that went public in 2021 and 2022. The conglomerate had invested a total of $2.3-2.4 Bn in these four new-age companies.
Among the four listed companies, Paytm is proving to be a drag on SoftBank’s investments in India. In July, SoftBank offloaded over 2% stake in Paytm’s parent entity One97 Communications worth about $300 Mn.
