SoftBank to resume investing in Indian start-ups this year
SoftBank is gearing up to invest in Indian start-ups once more after an 18-month hiatus, according to Sumer Juneja, Head of India and EMEA at SoftBank Investment Advisers. In a recent interview with Moneycontrol, Juneja shared that the Japanese investor plans to resume deal-making in the coming months. This is because market dynamics are shifting and the founders are adapting to new valuations.
Shift in market dynamics and investment strategy
Juneja explained that during 2022 and early 2023, investors prioritized keeping their portfolios afloat amid the funding winter, leading to a decline in deals. However, as Seed and Series A/B deals rebounded in the latter half of 2023, growth investors' pipelines expanded. He stated, "We will do smaller cheques only if the market dynamics require it, especially since companies have become more capital efficient and want to raise less." SoftBank will maintain its focus on growth-stage investments.
SoftBank's India bets and monetization focus
Since November 2018, SoftBank has poured around $11 billion into Indian start-ups and recorded exits valued between $6.2 billion and $6.5 billion. Juneja underscored the significance of vintage in investing and pointed out that companies funded from mid-2023 onwards will be an excellent cohort for investment. He also emphasized the importance of exits for investors like SoftBank, saying, "As disciplined as you are going in, you have to be as unemotional and disciplined coming out."
Engaging with domestic mutual funds for IPOs
Juneja also shared insights from the first wave of initial public offerings (IPOs) involving SoftBank's portfolio companies. He highlighted the need to leave returns on the table for retail investors and engage deeply with domestic mutual funds. "The Indian mutual fund industry is becoming very strong. We get around $1.5-$2 billion in monthly systematic investment plans (SIPs). So, today in India, a company cannot price an IPO without the mutual funds being in the lead," he explained.
