SoftBank, the largest corporate venturer worldwide in recent years, is reportedly set to reduce its activity amid political and public market turmoil.
Japan-headquartered telecommunications and internet group SoftBank is set to cut down its rate of investment as share prices in tech companies continue to dwindle, the Financial Times has reported.
The news came shortly before an internal memo obtained by Axios on Friday revealed Ronald Fisher is set to step down as head of US investments at SoftBank Investment Advisers (SBIA), which manages the corporate’s Vision Funds.
SoftBank began 2022 on a tear and has participated in 58 rounds this year according to Pitchbook data, but founder, chairman and CEO Masayoshi Son instructed executives at a recent meeting to be more conservative, people briefed on the discussions told the FT.
The company has been the largest corporate venturer in terms of money spent for some years, having raised $98.6bn for its first Vision Fund as of 2018, much of which came from Middle Eastern sovereign wealth funds.
Vision Fund had been meant to represent the first iteration in a series of massive-scale funds, but its performance was initially hampered by the subsequent result of its two largest investments: ride hailing service Uber and workspace provider WeWork.
The Vision Fund portfolio rebounded on paper in the wake of the coronavirus pandemic boosting some of its mobile services and artificial intelligence-focused portfolio companies, leading to it booking substantial paper profits over the course of 2021.
However, SoftBank has not been able to lure external limited partners for Vision Fund 2, which was expanded from $10bn to $30bn in size in May 2021, four months before it allocated $3bn to a second investment vehicle for its Latin American-focused Innovation Fund.
Of the company’s 2022 investments, 35 were in rounds sized at $100m or above, the largest being the $935m series E that doubled freight forwarder Flexport’s valuation to $8bn in February, and food delivery service Swiggy’s $700m series K the previous month which valued it at $10.7bn.
The tech market is in a period of readjustment following the boom in 2020 and 2021, which has led to a fall in valuation for several SoftBank portfolio companies.
SoftBank is at a disadvantage in that it has not attracted LPs for Vision Fund 2 or Innovation Fund while the war in Ukraine has affected its earnings and soaring interest rates have impacted its ability to raise money.
In addition, the Chinese government’s crackdown on its tech industry has made it more difficult for SoftBank to cash in on its biggest bet, the early stake it bought in Alibaba, as the e-commerce group’s share price has more than halved in the past year.
Ron Fisher will move to an advisory role later this month and will be succeeded as chairman of SBIA’s US operations by managing partner Andrew Kofman, but the fund’s US deals will now be overseen by SBIA chief executive Rajeev Misra.
The move was preceded by the departures of several more top executives from the corporate’s investment team in recent months.
The most prominent development was the January exit of SoftBank chief operating officer Marcelo Claure, who had formed the initial Innovation Fund. Other executives to have left in the past 18 months include Ruwan Weerasekera and Penny Anne Bodle in late 2020 and Dipchand Nishar a year later.
