SoftBank Vision Fund, the prominent global investor in tech startups, reported a significant loss of $32 billion for the financial year ending in March. This represents a 70% increase in casualties compared to the previous year.
The losses are due to valuation corrections across SoftBank‘s portfolio of tech companies, influenced by a weakening global economy. The fair value of its portfolio was marked down over the quarter by $2.3 billion to $138 billion.
Earlier this year, Yoshimitsu Goto, the Softbank CFO, stated that the company had adopted a “defence mode” approach and was actively preparing for three potential scenarios. SoftBank‘s outlook includes the possibility of the market exhibiting a gradual recovery within this year or by the second half of this year. However, SoftBank is also prepared for a worst-case scenario in which market conditions remain challenging until early 2024.
SoftBank’s Vision Fund 1 incurred unrealized losses of $1.6 billion each in SenseTime Group and GoTo and nearly $800 million in DoorDash. In response to the challenging market conditions, SoftBank has become more cautious about deploying new capital to startups in recent quarters.
Despite the losses, SoftBank maintains that 94% of its portfolio companies have a cash runway of over 12 months. The firm remains focused on stabilizing its existing investments while considering raising funds for Vision Fund 3 in the future. Additionally, SoftBank highlighted the smooth progress of Arm’s anticipated initial public offering, which could generate significant returns for the conglomerate.