SoftBank to Increase Investment in Latin America This Year "Additional $8 Billion"

SoftBank Innovation Fund Exclusive to Latin America
Estimated Investment Scale of $8 Billion So Far
"An Additional $8 Billion Mobilized Through Vision Fund 2"

SoftBank Group, which sparked a venture capital boom in Latin America, has expressed its intention to expand investments in local tech startups this year.

Bloomberg reported on the 28th (local time), citing interviews with insiders, that the recent harsh correction in the valuations of tech startups in the Latin American region is stimulating SoftBank's investment sentiment. Juan Frank, managing partner of the SoftBank Latin America Fund, also said, "Investment activities, which had been subdued due to high interest rates and corporate valuations in the Latin American region, are expected to recover."

In 2019, SoftBank created the $5 billion Latin America-dedicated 'SoftBank Innovation Fund,' attracting significant attention. At that time, as the internet and smartphones were rapidly spreading and the IT services market was booming, the fund aimed to support growth by investing in emerging tech companies in the Latin American region. Subsequently, an additional $3 billion was raised to actively invest in local fintech and software companies such as Nu Holdings Ltd, Gympass, Kavak, and Rappi.

However, in early 2022, key personnel managing the existing fund resigned, and with the local capital market contraction blocking investment exit methods such as IPOs, SoftBank's Latin America investment portfolio began to stagnate. It was reported that out of over 100 companies reviewed by the SoftBank Latin America Fund last year, only seven received final investments. The first company sale since SoftBank's entry into Latin America also took place during this period. In June last year, SoftBank sold its stake in Brazilian fintech company Pismo to Visa, the world's largest financial payment company.

This suggests that the previously subdued venture investment environment in Latin America has recently entered a recovery phase. Managing partner Frank explained, "Since the second half of last year, the spread between local founders' expectations and the valuations offered by investors has significantly narrowed, which is a factor in the market rebound." He added, "Nevertheless, capital raising costs remain high, and attractive deals are still scarce in the market. We are focusing on businesses such as software and financial infrastructure, which require relatively less cash initially and have good margins." He also stated that if additional capital is needed in Latin America in the future, they plan to mobilize up to $8 billion from the 'Vision Fund 2.'