(Bloomberg) -- SoftBank Group Corp., which was a driving force behind a venture capital craze in Latin America, expects investments to pick up in the region again this year as valuations come down to more realistic levels as part of a tough correction for technology startups. 

Juan Franck, managing partner of the SoftBank Latin America Funds, said he expects a pickup in activity after several years of heightened caution amid high interest rates and a dearth of attractive deals. 

“We continue to have a healthy pipeline of opportunities, but we will continue to be super judicious on valuations,” Franck said in an interview. The market rebounded in the second part of last year, he added, as the spread between founder expectations and the valuations investors were willing to offer “came down significantly.”

SoftBank made a huge splash starting in 2019 after launching a $5 billion fund dedicated to Latin America. It later committed another $3 billion to the region and was a major backer of companies including Nu Holdings Ltd., Gympass, Kavak and Rappi. After the previous team exited in early 2022, the bank has refocused its investment strategy on largely managing its current portfolio as capital markets remain largely closed for exits like initial public offerings.

In 2023, SoftBank’s LatAm investment team looked at more than 100 companies but made only seven investments, Franck said. 

It also sold some of its investments in the region for the first time. SoftBank was among the sellers of Pismo, a Brazilian financial-technology firm that Visa Inc. acquired for $1 billion in June. Other divestments included stakes in Avenue Holding Cayman which was bought by Itau Unibanco Holding SA and Mexican payment firm Yaydoo SAPI de CV, which was acquired by PayStand Inc.

As of Dec. 31, the funds had committed $7.8 billion in Latin America with the fair value of those investments marked at $6.3 billion. That’s up $600 million from March of last year.

‘Deep Pool’

“We’re excited because we still have a deep pool of entrepreneurs and the big problems to be solved are still there,” Franck said. “2024 is very interesting because the expectations in terms of valuations are much more reasonable for very strong companies.”

If SoftBank needs additional capital to deploy in Latin America going forward, it can tap its flagship Vision Fund 2, which has around $8 billion, Franck said. 

SoftBank joins some of the largest funds in the region, which have said they’re ready to make fresh investments in tech startups after mostly waiting on the sidelines last year. 

Read more: Venture Firms Flush With $4 Billion Eye Latin America Return

As capital broadly still remains expensive and scarce, SoftBank prefers businesses that require relatively little up-front cash to get started and have good gross margins, such as those in software and financial infrastructure, Franck said. 

“We prefer to invest in capital-light businesses,” he said. “We will continue to be super disciplined.”

--With assistance from Cristiane Lucchesi.

©2024 Bloomberg L.P.