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Financing Titans Taking a Cautious Approach
Financing Titans Taking a Cautious Approach

January 12, 2023

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Financing Titans Taking a Cautious Approach

Start-up funding is going through a turbulent time. Though funding is not that low, the air in the market is a bit negative. According to the analyst, the major issue is a decrease in late-stage funding, which has resulted in a significant decrease in funding for mature or scaled start-ups.

But leaving aside the drop in funding, if we look at the current scenario of the two major funders of the start-up ecosystem, Tiger Global and SoftBank, a lot can be understood.

If we talk about SoftBank, 21 Indian unicorns are backed by them in one form or another.

This year has been very different for these two giant investors.

SoftBank

  • SoftBank, which invested more than USD 3 billion in 2021, has invested only USD 500 million in 2022, far less than the previous six-year average of USD 1.8 billion.
  • There were three deals worth more than USD 500 million in 2021, but none this year.
  • Till 2021, they only had 3 exits, but in 2022, they already had 4 exits. 

Tiger Global

  • Tiger Global Investments is also down 70% in 2022.
  • > USD 2 Bn were invested by Tiger Global in 2022, but this year it's just > USD 700 Mn.
  • There will be three deals worth more than $500 million in 2021, but only one this year. 

 

But what led to such a downfall?

  • Macroeconomic headwinds: China's economic factors and Ukraine's Russia crisis
  • SoftBank Vision Fund reported its largest quarterly loss of more than USD 20 billion.
  • A valuation loss in some of India’s and South Korea's new-age IPOs

Down but not out:

  • shifting focus towards early-stage start-ups
  • Seed and early-stage bets in India are on start-ups such as e-commerce enabler Shopflo and FMCG wholesale platform ApnaKlub.

Slowdowns from Tiger Global and SoftBank might not be good news for India start-ups, but the shift in strategy towards seed and early-stage investments is a big breather. This strategy shift will also provide a new ray of hope for young start-ups to come forward and work to prove their worth and make their presence felt.

 

 

 


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