Softbank Group has recently reported a quarterly loss of more than $23 billion. The company said this net loss in the June quarter “was recorded mainly due to the monetization of investments in public portfolio companies.” As a result, this may cause a longer funding winter for startups.
Masayoshi Son, the founder and chief executive of SoftBank Group, is due to the unicorn founder’s unwillingness to accept lower valuation in fresh funding deliberation. This assertion has led the 64-year-old executive, whose Vision Funds have backed over 470 startups globally in the past six years, to believe that the “funding winter” may last longer for unlisted companies.
Masayoshi said unicorn leaders “still believe in their valuations, and they wouldn’t accept that they may have to see their valuations go lower than they think.” The 64-year-old executive also stated that the winter for publicly-listed companies is continuing, but a similar downturn for startups may last longer.”
Startups worldwide are facing a sharp crunch in funding as investors grow cautious about the market conditions – despite increasing, startups are raising record amounts of funds in recent months. Klarna, a SoftBank-backed firm, raised $800 million in new financing round that valued the firm at $6.7 billion, down from $45.6 billion a year ago. In another case, Stripe, one of the world’s most valuable startups, cut its valuation by 28% in an internal assessment.
The founder of SoftBank Group, about the market conditions, said that “Now seems like the perfect time to invest when the stock market is down so much, and I have the urge to do so, but if I act on it, we could suffer a blow that would be irreversible, and that is unacceptable.”
Comparing the company’s last year’s investment profile to the current year, SoftBank invested $600 million in the quarter that ended in June, down from $20.6 billion during the same period a year ago. The company has also reduced the size of its check, taking only 5% to 10% ownership in firms it backs.
Other high-profile investors, including, Sequoia, Lightspeed, and Y Combinator, have advised their portfolio founders to “plan for the worst” and accelerate any fundraising deliberation if the runway isn’t long enough.
The quarterly loss is the company’s biggest. Masayoshi Son expressed his remorse, stating, “When we were turning out big profits, I became somewhat delirious, and looking back at myself now. I am quite embarrassed and remorseful.”
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