Masayoshi Son, the chief executive of SoftBank Group, which reported a quarterly loss of over $23 billion, is worried that the funding winter for startups may linger in the immediate future.
The 64-year-old executive, whose Vision Funds have backed over 470 startups globally in the past six years, said on Monday that some unicorn founders are unwilling to accept lower valuations in fresh funding deliberations, a fact that has led him to believe that the “winter maybe longer” for unlisted companies.
“Unicorn companies’ leaders still believe in their valuations and they wouldn’t accept that they may have to see their valuations [go] lower than they think,” he said, according to company’s official translator.
“So until the multiple of listed companies is lower than those of unlisted companies, we should wait,” said Son, referring to a popular way investors assign value to firms. He said the winter for publicly listed companies is still continuing, but a similar downturn for startups “maybe longer.”
SoftBank, whose Vision Funds are larger than funds of any other investor globally, is “very selective” in evaluating any new investment opportunities. The company has also reduced the size of its check, taking only 5% to 10% ownership in firms it backs, he added.
SoftBank is the latest backer to sound the alarm as the market reverses much of the gains following a 13-year bull run.
Other high-profile investors including Sequoia, Lightspeed and Y Combinator have also advised their portfolio founders to “plan for the worst” and accelerate any fundraising deliberation if the runway isn’t long enough. Tiger Global, another prolific backer, recently told some founders that it is also slowing down its investment pace, TechCrunch reported earlier.
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