SoftBank Group’s investment vehicles posted a loss of nearly $6 billion in the quarter ended December as the Japanese tech investor continues to bleed through the market downturn and significantly scale back new hedging.
This is the fourth straight quarter in which SoftBank Group has lost money, prompting many to challenge the fundamental premise of the giant, which has deployed more capital in technology markets worldwide than anyone else in the past decade.
SoftBank said it lost $5.8 billion in Vision funds and Latin America funds in the quarter. While a $5.8 billion loss is nothing to write home about, SoftBank will take comfort in the fact that it lost $10 billion in the prior quarter.
The company said the fair value of its current late-stage portfolio is more than $37 billion.
In 2021, SoftBank was one of the most prolific investors in the world, cutting checks worth more than $20 billion in just a quarter as many investors aggressively rushed to land big deals. When the market turned around early last year, many lenders had to brutally recalibrate their strategies.
SoftBank Vision Fund invested just $300 million each in Q2 and Q3, it said. About 49% of all its investments are now in startups with more than $1 billion in revenue, it said. SoftBank-backed startups raised more than $16 billion by 2022, the company said.
Image credit: SoftBank Group
While the financial health of SoftBank’s private investments is opaque, it’s clear how it’s performed in the public markets — and that’s not good.
Overall, SoftBank Vision Fund 1’s holdings in its publicly traded companies have a fair value of $19.9 billion, compared to the $31.4 billion the giant has invested in them. Through the Vision Fund 2, SoftBank gave $48.3 billion to businesses and is currently looking at a loss of $17.6 billion.
While SoftBank’s shares in Coupang have a $4.2 billion gain, the Japanese company has lost more than $9 billion in Didi and $5.1 billion in WeWork.
On Tuesday’s earnings call, SoftBank said it is in “defense mode” and preparing for three different scenarios. The company expects the market to show a linear recovery this year or the second half of this year, or to stumble through early 2024.
SoftBank has been trying to discipline its portfolio companies over the past year as it became extremely difficult to raise money. Masayoshi Son, founder and CEO of SoftBank Group, warned that the funding winter for startups could prolong as some unicorn founders are unwilling to accept lower valuations in new funding deliberations. Son skipped the earnings call on Tuesday.
SoftBank said it is taking a “cautious approach” when investing in the blockchain and crypto sector. It has made 26 investments in the category to date, with a current fair value of $1 billion. The company wrote off a $97 million investment it made in the collapsed cryptocurrency exchange FTX.
The company maintains a “high conviction” in AI, SoftBank said.
