Uber, Slack, WeWork and several other tech startups have seen its valuations fly high after a capital injection of what is currently one of the most buzzing investment players: Softbank. However, not only Uber, which went public in May, is trading way below its IPO, but the real-estate startup WeWork has also suffered a sharp fall, after a reduction from $47 to $15 billion on its valuation – which led the company to officially withdrawal its IPO plans.
While the Japanese group remains confident about its recent bets, the market doesn’t seem so positive about it – and many investors are worried that Softbank is creating a bubble in the market – that now is deflating. But in an interview with the newspaper Nikkei Asian Review, Rajeev Misra, CEO of Softbank Investment Advisers and head of the Vision Fund, didn’t seem to agree with any of these critics.
“Whether you buy [at] 10% more or less valuation, does it matter if we’re looking for three times return? If you think your $1 is going to become $3, whether you pay $1.1 or $1 [is less important],” he told the newspaper.
For Misra, the Vision fund has “patient investors,” and these short-term losses don’t affect an investment model based on the long-run – such as the ones of Softbank’s funds. But the executive disclosed efforts of the Japanese conglomerate to address these issues. “We are developing a group which is called ‘IPO readiness,’ which will help companies prepare to go public.” The support group will help these players to “optimize their financial balance sheets”, in order to aim at value generation.
Regarding the Vision Fund 2, expected to debut by the end of the year, Misra told the media outlet that this second venture will maintain the current strategy of focusing on “disruptive” AI-driven tech companies. “There are lots of industries that will get disrupted, so we will find other disruptive industries, of course. Health care, finance, entertainment, media entertainment, these are large industries that still have massive potential to be disrupted through technology,” explained the executive.