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Contxto – To say that 2020 has been a tough year for Japanese investor, SoftBank, is an understatement. Its first US$100 billion Vision Fund may very well be its last, as it acknowledged a US$18 billion loss for its recent fiscal year last Monday (18).
The struggle for profitability, coupled with coronavirus has put some of its major bets like WeWork and Oyo Rooms in jeopardy. As things were, its stake in Uber was also constraining SoftBank‘s books.
But according to its CEO, Masayoshi Son, it will be up to the “winged unicorns” among its startup investments that will pull its Vision Fund through. But might its ventures in Latin America be among these mythical saviors? Moreover, is the region still on its mind and a spot saved for new startups within its portfolio?
While the investor hasn’t given specific details as to its future plans for the region it recently hinted that it still has faith in its operations in Latin America.
SoftBank and Latin America
The venture capital (VC) firm’s investments in the region appear to have mixed results. For some of SoftBanks’ portfolio companies in the region, the outlook is grim.
Mexican fintech Clip’s reliance on small businesses staying open and them using its physical POS also poses a risk to its financial health.
But the coronavirus pandemic may have greatly favored some of SoftBank‘s other startups.
Fintechs Ualá and Banco Inter have seen a surge in transactions and users. Companies in e-commerce like VTEX, Petlove, and Olist have likely seen a rise in business. And of course last-mile delivery startups like Rappi and Loggi are busier than ever.
With this mix in mind, the venture capital firm finds the region to be worth believing in for two reasons. The first is its potential in various industries like those we just covered: fintech, e-commerce, and last-mile deliveries. And second, it sees the absence of other foreign investors in Latin America as an opportunity for itself.
But as George R.R. Martin put it “words are wind.”
The VC giant stated it wouldn’t rescue its portfolio companies. However it does have cash stashed away for follow-on investments. So we’ll have to wait and see which startups are favored, grow wings, and fly away into the sunset, happily ever after.
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