Japanese conglomerate SoftBank is preparing itself again to invest in Indian startups after a dry funding spell of nearly 18 months.
SoftBank will soon resume signing deals with Indian startups, Sumer Juneja, head of India and EMEA at SoftBank Investment Advisers, told Moneycontrol.
Juneja’s statement comes as investors across the board tighten their purse strings and tread gingerly on the companies in which they are seeking to invest. Even late-stage investors such as Tiger Global, Prosus, and Alpha Wave have remained on the back foot.
Although the Japanese investment major previously followed a wait-and-watch strategy, it is now actively pursuing investments in new-age enterprises and expanding its portfolio in India.
Juneja told Moneycontrol that in 2022 and early 2023, investors, particularly early-stage ones, were focused on portfolio preservation during the funding slowdown, resulting in reduced deal-making. “As seed and Series-A/B agreements increased in the second half of 2023, the growth investor pipeline is expected to rise,” said Juneja.
However, 2024 will be different from prior years in that founders will now accept a reset in valuations and be willing to reprice themselves as they attempt to expand and capitalise on market opportunities. Cheque sizes at the growth stage could also moderate after founders implement various cost-cutting methods.
“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. We will be fine investing $50 million, but ideally not lower than that. An investment below $50 million will not move the needle for SoftBank,” Juneja was quoted as saying by Moneycontrol.
SoftBank, which typically spends more than $100 million every round, will continue to do so, particularly in growth-stage investments.
SoftBank has invested $15 billion in India, funding nearly one-fifth of the country’s 100+ unicorns (startups worth more than $1 billion).
In a recent development, it sold stakes for $1.8-1.9 billion during public offerings and through post-listing sales in four Indian startups — Paytm, Zomato, PB Fintech, and Delhivery — that went public in 2021 and 2022. The conglomerate invested a total of $2.3-2.4 billion in these four new-age enterprises.
Paytm, one of the four public companies, is proving to be a drag on SoftBank’s investments in India. In July, SoftBank sold more than 2 per cent of its stake in Paytm’s parent company, One97 Communications, for approximately $300 million.
First Published: Jan 11 2024 | 2:49 PM IST