Japanese conglomerate SoftBank is gearing up to resume its investment activities in Indian startups, marking the end of an 18-month investment hiatus. According to Sumer Juneja, head of India and EMEA at SoftBank Investment Advisers, the company is actively exploring new investment opportunities in the Indian market.
This development comes against the backdrop of a cautious investment environment, with various investors adopting a conservative approach in selecting companies for funding. While players like Tiger Global, Prosus, and Alpha Wave have exercised caution, SoftBank is signaling its intent to reengage with the Indian startup ecosystem.
Juneja mentioned that the investment landscape underwent a slowdown in 2022 and early 2023, with a focus on preserving portfolios, especially by early-stage investors. However, with an uptick in seed and Series-A/B deals in the latter half of 2023, growth investors are anticipated to witness an increase in deal flow.
As founders adjust to a reset in valuations in 2024, there is an expectation that they will be more open to repricing themselves to tap into market opportunities. While cheque sizes at the growth stage might moderate, SoftBank, known for its substantial investments, remains committed to larger funding rounds.
“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 Mn, but ideally not lower than that. An investment below $50 Mn will not move the needle for SoftBank,” highlighted Juneja.
SoftBank, which has historically invested over $100 Mn per round, is poised to continue this trend, particularly in growth-stage investments. With a significant track record in India, having funded nearly a fifth of the country’s 100+ unicorns, SoftBank has injected a total of $15 Bn into the Indian startup ecosystem.
In a recent move, SoftBank divested stakes worth $1.8-1.9 Bn in four Indian startups – Paytm, Zomato, PB Fintech, and Delhivery – that went public in 2021 and 2022. Despite the recent success of these public offerings, Paytm has proven to be a challenging investment, with SoftBank offloading a 2% stake worth about $300 Mn in July 2023.
