SoftBank Group Corp.’s new startup bets hit a record low last quarter as valuations continued to slide, chilling an already frosty startup winter, according to a report by Bloomberg.
The world’s largest tech investor — which at one point took part in $30 billion worth of financing rounds in more than 90 startups in a single quarter — participated in just eight investment rounds totalling $2.1 billion in the three months ending in December, data compiled by Bloomberg showed.
It was the first time the number of SoftBank’s deals fell to single digits since the launch of its Vision Fund.
Startup investments by SoftBank’s Vision Fund unit came below $350 million in the quarter just ended, a person familiar with the matter said. In total, the segment invested more than $144 billion in five-and-a-half years, which averages out to more than $6 billion per quarter.
SoftBank is not alone. Rivals Tiger Global Management, Sequoia Capital and Coatue Management have also tightened their spigots after shouldering big writedowns in 2022. Denied lucrative exits by a rout in tech valuations, deep-pocketed investors have pulled back, hitting pause on billion-dollar funding rounds that had become common in recent years.
“With all these players slowing down, we’ll see fewer headlines about newly-anointed unicorns, but I would argue that this is a healthy recovery period after partying a bit too hard these last three years,” said Coral Capital Inc. chief executive officer James Riney. Globally, VC investments fell 37% to $527 billion last year, according to market research firm Preqin.
SoftBank’s Vision Funds transformed the venture capital ecosystem, directing billions of dollars into hundreds of startups and forcing other investors to match their big bets. By flooding private markets with easy money, SoftBank and its rivals allowed companies to chase growth while avoiding the scrutiny of public listings. Early-stage investors could hope for a lucrative exit as late-stage investors fought to buy their stakes, lifting valuations throughout an opaque corner of investment.
Those bets have soured, along with promises of quick gains via big initial public offerings. SoftBank’s Vision Funds have been underperforming the rest of the VC sector. One fund is underwater.