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Friday, January 12, 2024

SoftBank to restart India investments in mid-2024 after 18-month gap: Report

SoftBank, which has backed players such as Swiggy, Paytm, and FirstCry, is gearing up to restart its investments in Indian startups after a gap of 18 months, MoneyControl reported on Thursday.

“In 2022 and early 2023, all investors, especially early-stage investors since they have a much more extensive portfolio, were focused on ensuring their portfolio reduces burn and survives the funding winter. It resulted in decreased dealmaking across the board. As seed and Series A/B deals have picked up in the second half of 2023, you will see an increase in the pipeline for growth investors,” Sumer Juneja, head of India and EMEA at SoftBank Investment Advisers, said in an interview.

Along with the Japanese tech giant, other investors such as Tiger Global, Prosus, and Alpha Wave, which were once one of the most active investors in the market, have either paused or reduced their investments in India.

Last year, SoftBank Group booked a $5.2-billion quarterly loss, its fourth straight quarter in the red.

SoftBank reported a 789-billion-yen ($5.2 billion) net loss for the three months to end-September, compared with a 3.01-trillion-yen profit a year earlier when it sold down a large portion of its stake in Chinese e-commerce giant Alibaba.

Juneja said 2024 will be different from previous years as founders will now come to terms with a reset in valuations and will be open to repricing themselves as they seek to grow and tap market opportunities. Cheque sizes at the growth stage could also moderate after founders undertook a raft of measures to bring down costs.

SoftBank Investment Advisers has pumped about $11 billion into Indian startups since it began operations in November 2018 and has already clocked exits worth $6.2-6.5 billion, the report said.

In August 2023, SoftBank Group said it was “timidly ↗” embarking on selective new investments with a focus on AI.

“We will do smaller cheques only if the market dynamics require it, especially since companies have become more capital efficient and want to raise less. We are excited about the India story and will not sit on the sidelines. We will be fine investing $50 million but ideally not lower than that. An investment below $50 million will not move the needle for SoftBank,” Juneja said.

SoftBank, which typically prefers investing over $100 million in each round, will, however, stick to growth-stage investments, the report said.

While four of its portfolio firms – Zomato, PB Fintech, Paytm and Delhivery – are listed, it is now preparing to list the next set of companies from its portfolio, which will include Swiggy, Firstcry, and Ola Electric.

James Mackreides
James Mackreides
'Mac' is a short tempered former helicopter pilot , now a writer based in Sofia, Bulgaria. Loves dogs, the outdoors and staying far away from the ocean.

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