SoftBank warns its fintech investments will be ‘more selective’ amid £18bn quarterly loss

SoftBank’s Vision Fund 2 has led multimillion-dollar investments in Revout, Klarna and other fintechs, but has indicated it will reduce its investments amid spiraling inflation.

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One of Europe’s most prolific fintech investors has issued a warning to the fintech industry that it will be “more selective” when investing in the sector.

SoftBank’s Vision Fund 2 has led multi-million dollar investments in the likes of Revolut, Klarna, OakNorth and Zopa.

But Masayoshi Son, chairman and founder of Japanese parent SoftBank and the brains behind its Vision Funds, said it would scale back on fintech investments after the Vision Fund unit posted a huge quarterly loss of 2.93 trillion Japanese yen (17.95 billion pounds). between April and June.

In a conference call today (Monday), Son said of his Vision Funds that “like it or not we know we have to reduce operating costs” and that “for new investments we have to be more selective”.

To date, SoftBank’s Vision Funds have invested in 473 companies, and Son appeared to suggest that funding for the existing portfolio could dry up.

He said: “Without new investment, we need to focus on increasing the value of the current portfolio.”

He added: “Since six months ago or even nine months ago, we have been defensive as opposed to offensive. In such a defensive mode, we have been more selective in terms of investments.

“Because of the huge investment value loss we recorded for new investments, we have increased investment discipline since the market has been damaged.

“Some might say now is the time to buy as opposed to sell. Well sometimes I feel that way, I agree with them.”

SoftBank’s Vision Fund, which started in 2017 and invests in fintech and other technology companies, has been hurt by a fall in high-growth stocks.

The Japanese giant said it saw a decline in the share prices of a wide range of its portfolio companies, which was “mainly caused by the global downward trend in share prices due to growing concerns about economic recession driven by inflation and rising interest rates”.

It said share prices of the private firms in the portfolio also fell.

Son said in May this year that the company was moving into a “defense mode”.

Tiger Global, which competes against SoftBank on fintech investments, has also been hurt, saying its flagship fund fell 50 percent in the first half of the year amid rising inflation.