SoftBank’s Vision Fund 2 has led multi-million dollar investments in Revout, Klarna and other fintechs but has indicated it will be dialling down its investment amid spiralling inflation.
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One of Europe’s most prolific fintech investors has delivered a warning to the fintech industry saying it will be “more selective” when investing in the sector.
But Masayoshi Son, the chairman and founder of Japanese parent company SoftBank and mastermind of its Vision Funds, said it would be dialling down on its fintech investments after its Vision Fund unit posted a huge quarterly loss of 2.93 trillion Japanese yen (£17.95bn) between April and June.
On a conference call, Son today (Monday) said of its Vision Funds that “like it or not we know that we have to reduce operational cost” and that “for new investments, we have to be more selective”.
To date, SoftBank’s Vision Funds have invested in 473 companies and Son appeared to suggest that funding for its existing portfolio could dry up.
He said: “Without new investment, we need to focus on enhancing the value of the current portfolio.”
He added: “Since six months ago or even nine months ago, we have been defensive as opposed to offensive. In such defensive mode, we have been more selective in making investments.
“Because of the huge investment valuation loss we recorded for new investments we have heightened investment discipline since the market is hurt.
“Some people may say now is the time to buy as opposed to sell. Well sometimes I feel like that, I agree with them.”
SoftBank’s Vision Fund, which began in 2017 and invests in fintech and other technology companies, has been damaged by a slump in high-growth stocks.
The Japanese giant said it saw a decline in the share prices of a wide range of its portfolio companies, which was “mainly caused by the global downward trend in share prices due to growing concerns over economic recession driven by inflation and rising interest rates”.
It said the share prices of its private firms in its portfolio also declined.
Son said in May this year that the company was shifting into a “defence” mode.
Tiger Global, which competes against SoftBank on fintech investments, has also been hurt and said its flagship fund fell 50 per cent in the first half of the year, amid surging inflation.