When SoftBank launched its ambitious US$100 billion Vision Fund in 2017, it threatened threatened The Ken Will SoftBank’s Vision Fund turn us blind? Read more to reshape the startup investment landscape. With the largest VC fund ever, SoftBank made several huge punts on largely-unproven companies who in turn threatened to use this huge capital as a moat to obliterate competition.
Things didn’t quite pan out that way.
The unravelling of its US$10 billion bet in co-working startup WeWork and the paper losses recorded as a result of the Uber IPO led SoftBank to report a loss of US$18 billion in 2019. This was the largest loss in its 30-year history.
If that wasn’t bad enough in itself, SoftBank was further buffeted by the double whammy of activist shareholders gunning for governance reforms and the fall-out of the pandemic on key portfolio companies in the hospitality and ride-hailing sectors.
The broad negative sentiment and the run on its share price forced SoftBank into a massive share buyback. It also trimmed its stake in holdings such as Chinese conglomerate Alibaba and UK-based microchip designer Arm.
But just as it looked like SoftBank had painted itself into a corner, the tide turned again.
For the last fiscal, the company reported net profit of US$46 billion, the largest recorded for any Japanese firm. This was largely driven by the buoyancy in public equity markets, allowing SoftBank to record massive gains for its listed portfolio firms like South Korean e-commerce firm Coupang. SoftBank’s own share price has nearly doubled in value over the past year.
According to data provider PitchBook, the firm is on pace to participate in more VC deals in 2021 than ever before, having recorded 69 deals in the last six months.
In India too, SoftBank seems to have returned with a vengeance. Post its mega-exit of Flipkart in 2018, where it recouped US$4 billion on a US$2.5 billion investment made barely a year prior, SoftBank has operated largely under the radar. But in the last six months or so, the company has made a number of investments in India. In a press interview, SoftBank Vision Fund CEO Rajeev Misra hinted that the firm has deployed more than US$2 billion in India over the past six months and further said that “..over the last four years, we are the largest tech investor in India and will continue to be that way.”
While there have been no official statements yet, SoftBank is said to be in the process of finalising large investments in Flipkart and Swiggy. In the last few months, it has even catapulted four Indian startups—Meesho, Zeta, Mindtickle, and OfBusiness—to unicorn status.
But if you were tempted to believe that this indicates that SoftBank is back up on the top of the totem pole of India’s most influential VCs, there is a catch.