SoftBank invested $300 million in Q3, doesn’t want to ‘rush and waste money’

SoftBank CFO Yoshimitsu Goto

SoftBank invested $300 million across ‘a handful’ of deals in the December quarter as the Japanese technology investor did not want to ‘rush and waste money’ amid uncertain macroeconomic conditions, the company’s senior executives said in an earnings presentation on February 7.

In what seemed to be a big change, SoftBank founder Masayoshi Son was absent from the presentation. Son is popular for laying out the company’s strategy and reiterating its bold vision in the quarterly meetings with analysts and press.

The earnings discussion on February 7 was led by SoftBank Chief Financial Officer Yoshimitsu Goto. He extensively talked about the company’s financial health – and said it was currently in a ‘solid defence mode’.

Goto explained that the company was closely watching inflation trends, key interest rates, possible recessions and geopolitical risks to decide when to switch back to an ‘offence mode’.

The operator of Vision Funds, among the biggest tech investment vehicles in the world, has sharply brought down its investments over the past 5 quarters — $9.6 billion in Q3 FY22, $5 billion in Q4 FY22, $2.2 billion in Q1 FY23, and $300 million each in Q2 and Q3 of FY23.

The SoftBank finance chief said that the company is ready for three scenarios — linear early recovery, instability followed by recovery in H2 2023 which is based on the view of the majority of the unlisted market, and the worst case scenario of recovery after 2024.

The Japanese conglomerate went back into the red after it recorded ¥783.4 billion ($5.93 billion) loss in the December quarter, while its sprawling investment vehicle Vision Fund registered a loss of ¥730.36 billion ($5.52 billion).

Its investments were impacted downward revisions of portfolio company performance amid a weak macro outlook, especially for tech companies. At a time when the sector is grappling with a funding crunch, about 94 percent of the Japanese investor's portfolio companies have a cash runway of 12 months.

Over the last 12 months, its portfolio companies have attracted additional funding of more than $16 billion of capital raised across 87 funding rounds. More importantly, SoftBank is looking at a string of exits via public listings of its late-stage portfolio companies which now constitute 70 percent of its investments.

However, the Japanese tech investor's portfolio of publicly listed companies has suffered in the last one year amid a broader tech stock rout. It is sitting on losses of $500 million for its $1 billion investment in Paytm, $3.1 billion loss for its $3.2 billion investment in WeWork, $9 billion loss for its $12 billion investment in Didi, among others.