Japanese conglomerate SoftBank is severely cutting its planned startup investments through next March, Chief Executive Masayoshi Son said in a Thursday earnings call. With the announcement, Son joins a chorus of VCs who have been vocal about an economic downturn forcing them to tighten their belts.
“It depends on our LTV levels and investment opportunities, and we strike balance, but I will say compared to last year, the amount of new investments will be half or could be as small as a quarter,” said Son, according to a company-provided translation of the call.
VC funding has slowed down markedly amid a turbulent market. After a heady 2021 for much of the industry, startups have turned to quick cost-cutting and layoffs. The Dow has seen the longest downturn since 2020 this week, while crypto markets also fell 10% between Thursday and Friday alone. Some entrepreneurs and investors have gone so far as to question whether the industry is approaching something like the dot-com crash, with VC David Sacks calling it the "Panic of 2022" on Twitter.
The impact on VC looks particularly dramatic in the case of SoftBank, which is coming off a record-breaking 2021. Its $100 billion Vision Fund and $50 billion Vision Fund 2 (which includes $30 billion of its own money) made it and Tiger Global among the biggest players in VC last year. It also made headlines with the announcement of a $100 million Opportunity Fund, which has helped finance the projects of diverse founders who have struggled to find funding.
But in the last few months, the conglomerate’s VC strategy has done a 180. SoftBank recently reported a loss of $20.5 billion at its Vision Fund for the last fiscal year. The accompanying drop in SoftBank's value, along with the market slide, has meant Son taking a huge financial hit — some $25 billion, or almost two-thirds of his personal fortune.