Japanese tech investor SoftBank has been in talks with about four to five Indian start-ups, with valuations of around $400 to $500 million, to invest and support them in their next stage of growth. The investment bank is eyeing start-ups in the areas of B2C space, enterprise, and media, a report in the Business Standard stated.
The Tokyo-based investment bank is planning to inject $50-100 million into each of these companies, which is far less than its earlier rounds of investment in Indian start-ups.
In 2022, SoftBank had invested around $500 million, which was mostly in software as a service (SaaS) companies. This was significantly less than the $3.2 billion it had invested in 2021.
The report said that the investment bank could end 2023 flat, with total Indian investments below $500 million. At present, its total investment in Indian companies is pegged at $15 billion. It has also undertaken exits valued at $6-7 billion.
Despite all this, India continues to be SoftBank’s third largest market after the US and China and the top management of the company visited the country in March this year.
The report added that SoftBank is also looking into opportunities in companies where existing investors are willing to exit through a secondary sale as the companies have postponed their IPO plans. If these deals are finalised, it is looking at investing over $100 million in each of these deals.
The report comes at a time when most start-ups are facing a fund freeze or so-called funding winter as investors globally are investing with a pause over global uncertainties and growing fear of a recession in the West.
Of late, SoftBank and the Vision Funds have been facing tough challenges globally due to the meltdown of tech, forcing them to slash their spending on tech start-ups across the world.
The report stated that analysts have said that most of the high-growth Indian companies where SoftBank is an investor, such as hotel aggregator OYO, and e-commerce platform Meesho, have been drastically reducing cash burn, which could affect their earlier projected growth.
In the past, SoftBank has invested some of the successful start-ups in India. It started investing in Ola Electric when it was worth $1 billion. Once the latest round of fundraising gets cleared, the company will be valued at $6 billion. Similarly, while the investment bank started investing in Meesho at a valuation of $1.2 billion, the start-up’s last fundraising was at a valuation of $4.9 billion.