SoftBank is exploring the launch of a private credit fund to provide debt or debt-like financing to late-stage tech startups that are struggling to raise capital in the current market, according to a report by Reuters.
The fund would target companies that are too mature for venture capital but not yet ready for an IPO. SoftBank is reportedly targeting returns in the mid-teens.
The plan is still in the early stages and could change, said the report.
SoftBank has not yet commented on the report.
The move comes at a time when the venture capital market has slowed down and the IPO market has cooled.
In light of the recent collapse of Silicon Valley Bank, which has created a funding gap in the tech industry, several major investment and private equity firms have stepped in to fill the void, particularly with debt financing.
The private credit fund would be a new way for SoftBank to invest in tech startups. The company has traditionally invested through Vision Funds, which are large VC funds. The private credit fund would allow SoftBank to invest in a wider range of companies.
SoftBank recently reported a significantly reduced annual loss, partly due to a capital raise facilitated by its stake in Alibaba Group Holding Ltd. This helped offset investment losses incurred by Vision Fund, which suffered from underperforming investments such as WeWork and Didi Global.
Vision Fund’s portfolio comprises companies such as neo bank Chime and fintech firm Revolut. SoftBank is nearing the completion of deploying $56 billion capital in Vision Fund 2.
In another significant move, SoftBank-owned chipmaker Arm Ltd filed confidentially for a US stock market listing last month. This sets the stage for one of the largest tech IPOs in the United States this year.
