SoftBank Vision Fund loses $32 billion in a year on startups valuation cut

SoftBank Vision Fund lost $32 billion in the financial year ending March as the Japanese investment giant, the most prolific global investor in tech startups, suffers from the valuation corrections across its private and public tech backings amid weakening global economy.

The loss surged 68% from the same period a year prior, when SoftBank had reported $19 billion in losses at the Vision Fund unit. The losses come even as SoftBank has grown very cautious about deploying new capital to startups in recent quarters.

The Japanese conglomerate said its Vision Fund 1 made an unrealized loss of $1.6 billion each in SenseTime Group and GoTo and nearly $800 million in DoorDash.

“For private portfolio companies, the fair value decreased in a wide range of investments, mainly reflecting markdowns of weaker-performing companies and share price declines among market comparable companies,” SoftBank Group said in earnings report Thursday.

SoftBank chief finance officer Yoshimitsu Goto said the earlier this year that the firm had entered the “defence mode” and was preparing for three different scenarios. SoftBank anticipates that the market may start to show recovery linearly this year, or by second half of this year, or stumble through until early 2024.

The tremulous times at SoftBank Vision Fund means a tough time for many of its portfolio startups. SoftBank has served as a high-conviction growth investor for its portfolio startups, often leading or co-leading their later financing rounds.

SoftBank Vision Fund and Tiger Global escalated the pace of their deal making in 2021 as many investors believed that the rally in public stock markets would continue for the foreseeable future. But an immediate sharp decline in the markets, as the Fed increased interest rates and geopolitical events such as Russia invading Ukraine unfolded, many investors were left scrambling to find ways to cut losses.

More to follow.