SoftBank’s Masayoshi Son Warns Of Longer Financial Winters For Unicorns Unwilling to accept a cut in value

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Not just unicorns, businesses that are not listed could face the winter months that are more harsh and long than listed companies, Son said

The SoftBank CEO admitted to his mistake of becoming excited in 2021, when technology stocks were in a boom and is now ’embarrassed’ by his reaction

SoftBank has reported an operating deficit that was $21.7 Bn for its Vision Fund in June’s quarter.

SoftBank director Masayoshi Son, in the quarterly earnings call post-earnings which ended in June 2022, claimed that the current funding winter will continue for founders of unicorns who refuse to take a lower price for funding.

“Our Vision Fund experienced massive losses, but unfortunately, CEOs of unicorn companies continue to believe in their valuations and are not willing to be willing to accept that they could be required to see their valuation be lower than they imagine. Therefore as long as the value of non-listed companies is lower than the multipleof listed companies, we’re supposed to be patient,” Son said.

Not only unicorns, any non-listed companies could be facing winters that are longer and harsher than listed companies, Son added.

SoftBank disclosed an operating loss of $24.5 Billion in Q1 FY22 in comparison to the profit that was $5.6 Bn in the first quarter of FY21. The loss of the Vision Fund, on the other hand, was $21.7 Bn during the June quarter.

The SoftBank director admitted his mistake of becoming too excited in 2021 while technology stocks were in a boom and is now ’embarrassed’ by his reaction.

The investment company has used the option of selling shares of certain company portfolios (such Uber) Uber) for funds and also to cut operational costs within its own operations.

In the past, SoftBank has mentioned plans to sell assets worth $30 Bn in the event of the rising rates of interest and inflation, Russia-Ukraine conflict, and the soaring worth of the investments it has made in China have a negative impact on the fund’s value.

SoftBank’s India Portfolio

The current list of SoftBank’s listed startup portfolio within India include Paytm, Delhivery and Policybazaar.

The shares from Paytm as well as Policybazaar are trading at 57 51% and 1 percent in comparison to their last listing the shares of Delhivery are rising by 30.4 percent since their listing.

SoftBank is investing $1.6 Billion in Paytm to date and its current investment is $1.19 Billion. SoftBank has made investments of $397 million of its money in Delhivery and $199 million in Policybazaar to date, and the value of its investments stand at $907 Million and $583 million, respectively.

Paytm added $407 million net losses to the account and Delhivery contributed $510 million of profit for the fund. Policybazaar provided $384 million of profit towards Vision Fund 1, as according to SoftBank’s quarterly earnings announcement.

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Blinkit, Cars24, Meesho, Zeta, OfBusiness, Lenskart and many more are among the startups that are not listed that SoftBank has in its India portfolio.

Son’s comments Son could cause tension within the Indian startup community as well.

The Indian startup industry continues to see a dramatic decrease in the amount of funding. Startups that are homegrown have raised $19.7 Billion during the initial seven months in 2022. That’s less than 8% lower when compared to the same timeframe in the year before. With $1.12 Bn, the funding that startups raised was more than 75% less in July contrasted to the same period in January 2022.

The worries of an imminent recession, combined with rising interest rates, lower liquidity, and market volatility during the war between Ukraine and Russia have sent the startup industry into cutting-cost mania.

The result is that startups are eliminating employees in order to cut costs. In the report by 

By Economic Pitch More than 11,360 employees have been laid off by 2022 by companies like Unacademy, MPL, Ola BYJU’S and Unacademy, among others.

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