Shulou(Shulou.com)11/24 Report--

On the morning of January 26, Beijing time, it was reported that Softbank Corp. 's latest venture capital amount hit an all-time low last quarter as market valuations continued to decline, making the cold winter even worse.

Softbank Corp., the world's largest technology investor, has invested in more than 90 start-ups in a quarter and participated in financing worth $30 billion (currently about 203.4 billion yuan). But the data show that in the three months to December, the company participated in only eight investments, corresponding to a total financing of $2.1 billion (currently about 14.238 billion yuan). This is the first time that the number of investments in a single quarter has fallen to single digits since Softbank Corp. launched the Vision Fund.

In the just-concluded quarter, Vision funds actually invested less than $350 million (currently about 2.373 billion yuan) in start-ups, according to people familiar with the matter. In the past five and a half years, the vision fund has invested more than $144 billion (currently about 976.32 billion yuan), with an average of more than $6 billion per quarter (currently about 40.68 billion yuan).

Similarly, big-name venture capital firms such as Tiger Global Fund, Sequoia Capital and Kutu Capital all tightened their pockets after suffering a sharp pullback in 2022. As plunging valuations of technology companies reduced lucrative exit opportunities and deep-pocketed investors pulled out, billions of dollars of financing that has been common in recent years has become a rare species.

"as all participants slow down, we will see less and less news about unicorns. But I think it will be a healthy recovery after the orgy of the past three years." Coral Capital CEO James Rainey (James Riney). Global venture capital fell 37 per cent last year to $527 billion (currently about 3.57 trillion yuan), according to Preqin.

Softbank Corp. Vision Fund has changed the entire venture capital ecosystem. They have provided billions of dollars to hundreds of startups, forcing other investors to follow their investments. By introducing a large number of low-interest currencies into the private market, Softbank Corp. and his competitors have helped startups avoid the disadvantages of the public market while seeking growth. Early investors can wait for other investors to take over at a later stage and get a lucrative exit, pushing up valuations in this opaque investment sector.

But these big bets on startups have dwindled, dashing hopes of getting rich overnight through massive IPO. In fact, Softbank Corp. 's performance has lagged behind other venture capital companies recently, and one of the vision funds is even insolvent.

Even after a year of shrinking valuations, investors are still worried about the extent of the contraction in the future, and this uncertainty hurts the ability of startups to raise new capital, forcing startups of all sizes to slash costs. A recent survey of the founders of 450 early-stage startups in the us and Europe showed that about 80 per cent of them did not have enough money to last another year, and later startups were forced to slash their valuations.

That means many start-up mergers and acquisitions are likely this year, as investors under exit pressure are putting pressure on entrepreneurs to sell companies or shares to established companies. Adobe's $20 billion acquisition of Figma (currently about 135.6 billion yuan) is a typical case in point.

Softbank Corp. invested in the world's most high-profile start-ups and suffered huge asset write-downs, resulting in huge losses last year. Vision funds lost $7.2 billion in the September quarter and a record loss of $17 billion (currently about 115.26 billion yuan) in the June quarter.

Son, founder of Softbank Corp., promised that he would take defensive measures if the market remained weak. But the company is unlikely to turn things around any time soon. The company's performance is under further pressure as the dollar weakens. The dollar fell 9 per cent against the yen in the December quarter, after seven consecutive quarters of strength provided some support to Softbank Corp. 's performance. Kirk Boodry, an analyst at Redex Research, said Vision funds could lose money again as the weaker dollar offset local currency gains.

Instead of stepping up trading, Softbank Corp. invested 532 billion yen ($4 billion) to buy back shares, driving its share price up 15 per cent in the quarter to December 31. It was also the best quarter for the stock in the past two years.

Mr Budley said that while Vision Investment was unlikely to recover significantly in the short term, if it could push chip designer Arm to go public or complete an asset sale, it would reserve ammunition for the company's investment later this year. Softbank Corp. spent about $32 billion (currently about 216.96 billion yuan) on Arm.

But son has to face the still weak IPO market. With little chance of a rapid recovery, Softbank Corp. executives said they were ready to tighten investment for a few more months if necessary.

"We have a pessimistic view of the market environment." "but we have the ability to survive in such an environment for a long time," Softbank Corp. CFO Yoshimitsu Goto said on the earnings call last November. "We will also wait patiently for the right time."

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