In a harbinger of hard times to come for financial technology fundraising, fintech cheerleader SoftBank has posted a record loss at its Vision Fund investment arm amid a rash of downgrades among its portfolio companies.
The Japanese giant’s Vision Fund posted a $17.2 billion loss for the June quarter, it's second quarterly sequential loss this year.
The company, which has backed a host of fintechs, including Klarna, Revolut and Zopa, has warned that it will be dialling down future investments as the slump in the valuation of tech stocks coincides with rampant inflationary pressures and rising interest rates.
Speaking at a results presentation on Monday, SoftBank founder Masayoshi Son admitted to getting "over-excited" last year as companies in its portfolio experienced soaring valuations. Klarna, for instance achieved an eye-popping $46 billion valuation last June as Softbank led a $639 million funding round in the buy now, pay later giant. Its price tag has since nosedived to just $6.7 billion.
Son says he feels embarrassed by his earlier over-reaction, saying the fund was “making big swings and couldn’t hit the ball”.
Like many of the companies on its radar, Softbank is set to make dramatic cuts in the headcount at its Vision Fund unit as the company winds down its investment activity.