The Reason Valuation Cuts Are Happening To High Fliers

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Hotel booking platform Oyo has become the latest Indian based startup to receive significant valuation cuts, joining the many tech firms whose valuations have dropped recently.

Although Oyo is at the verge of going public in some few months, its valuation was cut down by SoftBank Group in the June quarter from its initial $3.4 billion valuation to $2.7 billion.

The travel tech company was valued at $10 billion in 2019, and has secured $4 billion in funding. This includes a venture debt round of $660 million from July 2021. Oyo was founded in 2012, and awaits approval from the Securities and Exchange Board of India as it prospects going public in the first half of 2023. The startup is reportedly targeting a $5 billion valuation.

Valuation cuts

Several startups have already received valuation cuts this year, and Oyo has become part of the long list of companies that fall into this category. One notable valuation cut so far this year is Instacart’s 40% valuation cut. The delivery company saw its number go from $39 billion to $24 billion in March. This went further down in July when mutual fund investors sliced this number down to $14.7 billion. A common thread here is that Instacart has also declared its intention to go public.

Another notable valuation cut in 2022 is Klarna’s 85% valuation cut in July. The pay later giant which has SofBank among its investors previously secured $800 million funding and saw its numbers sliced down to $6.7 billion from $46 billion.

SoftBank’s current predicament

Investment giant SoftBank has been going through some rough times lately and the recent valuation cuts is another tough stroke to hit the Japanese company. SoftBank Vision Fund 1 which has Uber, WeWork and DoorDash among its holdings recorded a net loss to the tune of $22.7 billion in August. These holdings have also been experiencing quarter to quarter downturns in public markets.

On the same vein SoftBank’s latest Vision Fund 2 has taken a similar hit recently. Apparently there is a decline in stock valuations which has affected the fair value of lots of privately invested companies.

As originally reported in (