Adedapo Adesanya
By Adedapo Adesanya
Nigerian startups may face a drop in investment as one of the key investing partners in the world, Softbank, has announced that it may cut its startup investments this year by more than 50 per cent.
This was disclosed by the chief executive, Mr Masayoshi Son, at the company’s earnings call on Thursday.
As per TechCrunch, the move is the latest high-profile investor to become vocally cautious about opportunities in the private markets amid a global slowdown.
According to its numbers, the Japanese conglomerate reported a loss of about $29 billion on investments at its Vision Fund 1 and Vision Fund 2 for the year ending March 31.
“It depends on our LTV levels and investment opportunities, and we strike balance, but I will say compared to last year, the number of new investments will be half or could be as small as a quarter,” said Mr Son.
This will have a ripple effect on Nigeria’s growing investment field, meaning it may reduce the number of investments that will enter the country which had the highest percentage of startups destinations in the African country.
Business Post had reported that Nigeria had the highest share of the $4.7 billion that came into the African continent in 2021.
Softbank was one of those key investors last year with investments in companies like OPay, Andela, among others.
This will further impact the projected increase in investments expected this year. In 2021, investments were twice as much as the total volume that was raised by African startups in 2020 just as there was also a 25 per cent increase in the total number of deals last year compared to the number of deals that were announced in 2020.
SoftBank joins a list of a number of investors including Tiger Global, Coatue and Dragoneer that have slowed down the pace of their investments as well as the amount of capital they are putting into startups this year.
