SoftBank's investment in India falls 84% to $500mn in 2022
SoftBank Group has been a major contributor to the growth of India's tech start-up scene. The company has, however, cut its investments in the country by a whopping 84% year-over-year in 2022. This change in strategy is due to macroeconomic headwinds that have tech companies all over the world reeling. Start-up funding in India has lowered considerably this year.
Why does this story matter?
When a prolific investor such as SoftBank cuts its investment by over 80%, it tells you a lot about how critical the ongoing start-up funding winter is. Venture capitalists are shying away from high-growth technology companies. This spells trouble, as such companies have been the main driver of global economic growth. If this continues next year, many unicorns will be in trouble.
SoftBank participated in only 6 deals this year
SoftBank Group invested about $500 million in India this year, according to Moneycontrol. Last year, this figure stood at $3.2 billion. This figure is significantly less than the last six-year average of $1.875 billion. Similarly, there is a drop in the number of deals the company was involved this year. Compared to 17 in 2021, SoftBank only participated in six deals in 2022.
The company exited 4 start-ups this year
Out of the 100-odd unicorns in India, SoftBank has backed nearly a fifth. This year, the Japanese conglomerate exited four companies. Before 2022, the company sold shares in only three companies. Two out of those three happened last year (Paytm and PB Fintech). Among this year's exits are logistics unicorn Delhivery, Paytm, Firstcry.com, and Blinkit (Grofers).
SoftBank didn't participate in any round of over $500 million
Through its investment arm Vision Fund, SoftBank has invested over $15 billion in India over the years. The company is no stranger to over $500 million rounds. However, this year, it didn't participate in a single round of more than $500 million. The largest round it participated in was Polygon's $450 million fundraiser. Last year, it was part of three over $500 million rounds.
Tiger Global has also cut down its investment in India
SoftBank is not alone in cutting down its investments in India. Tiger Global Management, a New York-based hedge fund, also lowered its investments in the country by 70% year-over-year. However, unlike Tiger Global which continues to deploy money in India in the form of small-scale investments, SoftBank has been extremely cautious. Masayoshi Son, SoftBank's chief, has been batting for monetization amid the economic downturn.
