SoftBank’s Vision Fund Crashes and Burns: $32 Billion in Losses Due to Falling Tech Stocks

The Vision Fund of SoftBank Group Corp sustained a historic loss of 4.3 trillion Yen ($32 billion) on investments due to a decline in technology company valuations worldwide, resulting in the Japanese conglomerate incurring consecutive fiscal losses. For the fiscal year ending on March 31, 2023, SoftBank reported a yearly loss of 970 billion Yen (approximately $7.2 billion). The Vision Fund unit’s investment losses amounted to 2.6 trillion Yen in the preceding fiscal year, which brought the company’s net loss to 1.7 trillion Yen ($12.6 billion).

SoftBank’s Vision Fund revealed a reduced loss of 297.5 billion Yen, equivalent to roughly $2 billion, during the fourth quarter. This was due to the worldwide growth of technology stocks, with investors favoring the tech sector for its potential to endure a potential macroeconomic downturn caused by the banking crisis. As a result, tech company shares experienced an increase in value in the Jan-Mar quarter. The fair value of SoftBank’s listed portfolio companies also rose from $23.8 billion as of December 31, 2022, to $24.9 billion at the end of the March quarter, spanning both Vision Fund investment units.

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SoftBank’s private portfolio companies, which constitute a significant portion of its investments, continued to face downward pressure on their fair value, remaining at $60.5 billion as of March 31, compared to $63.5 billion in the preceding quarter. This indicates that SoftBank lowered the valuations of some of its private portfolio companies. Meanwhile, during the January-March quarter, three of SoftBank’s largest listed portfolio companies, namely South Korean e-commerce firm Coupang Inc, Norwegian robotics company Autostore Holdings, and Chinese ride-hailing firm DiDi Global, saw their shares increase by approximately 25%, 9%, and 20%, respectively.

SoftBank’s investments in Coupang, Autostore Holdings, and DiDi Global all saw a rise in fair value as of March 31. The fair value of SoftBank’s investment in Coupang increased to $6.8 billion from $6.2 billion as of December 31, 2022. Autostore Holdings’ fair value also rose from $2.4 billion to $2.8 billion during the same period. DiDi Global’s fair value rose to $3.7 billion from $3.1 billion, based on SoftBank’s investment value of $12.1 billion. In addition, Paytm, SoftBank’s largest listed Indian portfolio company, saw its fair value increase to $0.6 billion at the end of March from $0.5 billion as of December, with a 20% increase in value during the January-March quarter. PB Fintech, a small investment for SoftBank, also saw its shares rise over 40% during the same period.

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SoftBank’s recent losses on its Vision Fund investments coincide with a decrease in its investment activity. In the December quarter, SoftBank invested only $300 million across a few deals, as it did not want to “rush and waste money.” India, which was a favored investment destination for SoftBank, has also experienced a significant decline in activity, with no investments made since July of last year, and an 84% drop in investments compared to the previous year.

Not only SoftBank, but other aggressive startup investors in India like Sequoia Capital and Tiger Global Management have also significantly reduced their investments in the past eight months. This has led to Indian startups implementing cost-cutting measures, including layoffs and closing non-core verticals. Furthermore, the Indian startup ecosystem has not seen the emergence of a new unicorn in the past eight months, despite being the world’s third-largest startup and unicorn ecosystem. Currently, India has 108 unicorns.