If you look at the investors of some notable Indian startups like Ola, OYO, Lenskart, Meesho, etc. you will notice one common thing. What’s that? It is SoftBank! A prominent and prolific investor in the Indian startup ecosystem. But you know what? Unlike any other conventional venture capitalist company, it operates primarily in the telecommunications and internet industries. So, you must be wondering- What does SoftBank do? Being a tech-oriented company, where does it get all the money to invest? All of your queries will be solved in this write-up.
SoftBank: A Brief Overview
SoftBank is a Japanese multinational conglomerate that operates in various sectors, including telecommunications, technology, finance, and investment. While its origins trace back to a software distribution business, it has transformed into a prominent player in the global tech industry.
One of SoftBank’s primary activities is investing in innovative companies and startups. They have established the SoftBank Vision Fund, a massive investment vehicle, with a capital pool of over $100 billion. The Vision Fund allows it to provide substantial financial support to promising companies at different stages of growth, from early-stage startups to established firms. We will delve into its detailed information later. Before that let’s have a brief overview of “SoftBank.”
|Company’s Name||SoftBank Group Corporation|
|Type of Industry||Integrated telecommunications services|
|Founders||Masayoshi Son (CEO)|
|Headquarters||Minato City (Tokyo, Japan)|
|Market Capitalization (FY22)||$54.6 billion|
|Competitors||Telefonica, MTN, Airtel, Orange|
Do you know, SoftBank Vision Fund is the global’s largest technology-focused venture capitalist? By leveraging its extensive financial resources, strategic partnerships, and a keen eye for groundbreaking opportunities, It aims to drive innovation and shape the future across diverse sectors, ultimately aiming to create a smarter, connected world.
What does SoftBank do?
SoftBank Group Corporation operates as a holding company. Meaning its main objective is to buy and own the shares of other companies to take control of their stocks. It operates through various segments that are given in the table below-
|Operating Segment of SoftBank Group Corp.||Services Provided|
|SoftBank||Mobile Communication, SaaS, Broadband, and Telecom Services in Japan|
|Sprint||Mobile Communication Services in the United States|
|Yahoo Japan||Internet Advertisements, e-commerce, and Membership Services|
|Distribution||Mobile Devices, PC (Personal Computer) Software & Peripherals like keyboards, mice, scanners, etc., and Mobile Accessories|
|Arm||Microprocessor designing, Software development|
|SoftBank Vision Fund||Financial Support to Startups|
|Delta Fund||Financial Support to Startups|
|Brightstar||Distribution of mobile devices overseas|
Although, all these segments confer a significant amount of revenue to SoftBank Group Corporation. But the major segment that brought it to the limelight, especially in India is SoftBank Vision Fund. But why is it so? See, startups need a considerable amount of funding to run their operations. In the journey of startups beginning from seed funding to the IPO, Venture Capitalists immensely provide financial support to them. In the last 10-15 years, a large number of startups were born in India. With startups, the need for VC funding also increased. This is the point where its Vision Fund provided funds to numerous Indian Startups. Soon, it became a well-known name in India!
Now, an obvious question that arises is “Where does it get all the money to invest?” From its revenue? Well, it is true, but not all of the investment money comes from the revenue. Then where does it come from? Look into the next section to find the answer.
Where Does Softbank Get All The Money To Invest?
As you have read above, one of its primary activities is investing in innovative companies and startups. They have established the SoftBank Vision Fund, a massive investment vehicle, with a capital pool of over $100 billion. The Vision Fund allows the company to provide substantial financial support to promising companies at different stages of growth, from early-stage startups to established firms.
SoftBank sources its investment capital from a combination of avenues. It includes-
- Cash Reserves– The SoftBank Group Corporation has its own substantial cash reserves, generated from its various business operations.
- Partnerships– It partners with other investors, including sovereign wealth funds, institutional investors, and corporate entities, to bolster its investment capacity. This collaborative approach enables SoftBank to access significant funding, which it then deploys to fuel technological advancements and disruptive ideas.
- From Other Funds– It receives a significant amount of its investment funds from the Saudi Arabian Public Investment Fund.
Thus, through this amalgamation of internal resources and external collaborations, SoftBank secures the financial firepower necessary to fuel its ambitious investment endeavors.
How much SoftBank has invested in India?
The Indian market is anticipated by VCs from all around the world. So is SoftBank! In India, SoftBank’s investments are worth $15 billion. According to the founder Masayoshi Son, “SoftBank will achieve its target much ahead of the stipulated timeline with a proportionally bigger volume.” Some of its major investments in Indian companies are-
|Company’s Name||SoftBank’s Investment Value|
|Ola Electric||$200 million|
So, it is clear that is a crucial investor in our startup ecosystem. However, the Japanese investment company is slowing down investments. This may have a significant impact on startups. As of now, the company has garnered $6 million through multiple exits from Indian startups. Besides Delhivery, it sold the majority of its shares in Paytm too!
Now, it is time to wrap up. SoftBank is a Japanese conglomerate involved in telecommunications, technology, and investments. It invests in companies across diverse industries to foster growth and innovation. It gets investment capital from various sources. Its primary investment arm is the SoftBank Vision Fund, which is backed by external investors and SoftBank itself. The company also generates capital through its successful ventures and ownership stakes in telecommunications and technology firms. It utilizes debt financing and strategic partnerships to secure additional funds. Despite facing challenges in some investments, SoftBank remains a significant player in global investments, driving technological advancements and shaping industries.