Masayoshi Son, Founder and CEO of Japanese investment group Softbank, on Monday warned unicorns and startups to prepare for a harsh and longer funding winter ahead, as the company posted disastrous results for the second straight quarter this year.
In the earnings call after reporting $23.4 billion net loss in the June quarter, Son said that unicorn leaders “still believe in their valuations and they wouldn’t accept that they may have to see their valuations go lower than they think”. The winter for publicly-listed companies is still continuing, but a similar downturn for startups may last “longer,” warned the 64-year-old executive.
“Now seems like the perfect time to invest when the stock market is down so much, and I have the urge to do so, but if I act on it, we could suffer a blow that would be irreversible, and that is unacceptable,” Son emphasised. The company said that the net loss in the June quarter “was recorded mainly due to monetisation of investments in public portfolio companies”.
Son advised companies to preserve cash to navigate the economic meltdown. “The world is in great confusion,” he said. When it comes to startups, Softbank invested more than $46 billion in startups last fiscal year.
SoftBank’s $100 billion Vision Fund was launched in 2017 and is backed by Saudi Arabia and Abu Dhabi. Son said in May that compared to last year, “the amount of new investments (in startups) will be half or could be as small as a quarter”.