SoftBank’s Vision Fund investment arm has reported a record loss, signaling challenging times ahead for financial technology fundraising. The Japanese conglomerate posted a $17.2 billion loss for the June quarter, marking its second consecutive quarterly loss this year.
The firm, known for its investments in numerous fintech companies such as Klarna, Revolut, and Zopa, has announced plans to reduce future investments. This decision comes as tech stock valuations plummet amidst rising inflation and interest rates.
During a results presentation on Monday, SoftBank founder Masayoshi Son acknowledged that he became “over-excited” last year when portfolio companies experienced soaring valuations. For instance, Klarna reached an impressive valuation of $46 billion last June after SoftBank led a $639 million funding round. However, its valuation has since dropped significantly to just $6.7 billion.
Son expressed embarrassment over his previous enthusiasm, stating that the fund was “making big swings and couldn’t hit the ball.” In light of these challenges, SoftBank is expected to implement significant layoffs within its Vision Fund unit as it scales back its investment activities.