Table of Contents
What has happened?
- One of the most active investors in India’s consumer internet ecosystem SoftBank could take its foot off the funding pedal,
- As the company’s founder Masayoshi Son has told his top executives to slow down investments, according to a report by Financial Times.
Softbank
- Founded in 1981, SoftBank Group Corp. is a Japanese multinational conglomerate holding company headquartered in Minato, Tokyo, and focuses on investment management.
- The Group primarily invests in companies operating in technology, energy, and financial sectors.
- It also runs the Vision Fund, the world’s largest technology-focused venture capital fund, with over $100 billion in capital.
Why slowing down investment?
- As per the FT report, the world’s largest tech investor is looking to raise cash in light of falling tech stocks and a regulatory crackdown in China — something that has severely hit the SoftBank Group’s holdings.
- The estimated write-down at the Japanese company for this quarter stood at $30 billion, although a recent uptick in some shares meant it was now closer to around $20 billion, the report stated.
How important is softbank for India’s startup?
- SoftBank, through its Vision Fund investment module, is one of the biggest investors in India’s start-up and consumer internet ecosystem, alongside the likes of Sequoia Capital and Tiger Global.
- In December, Son, speaking at India’s flagship global financial technology summit Infinity Forum, had said:
- “Just this year alone, we have invested $3 billion in India. We are the biggest foreign investor in the country. We are providers of about 10% of the funding of all the unicorns — firms valued at $1 billion or more — in India.”
- He also claimed that SoftBank-backed companies in India have created more than 1 million jobs.
Companies backed by softbank?
- The Japanese conglomerate has backed some of the biggest names in the Indian tech industry,
- Including Paytm, Flipkart, Ola, Oyo, Swiggy, Delhivery, InMobi, and Lenskart to name a few.
- Lately, it has also invested in companies such as Zeta, Meesho, OfBusiness, and turned them into unicorns.
What could be the impact?
- Given that SoftBank is a big player in the investment sector in India, the reported slowing down could push some of the start-ups to re-examine their ambitious projects.
- However, on a broader scale, the impact could be limited as a result of other funds accelerating their investments.
- Tiger Global, for example, has raised more than $11 billion for its latest growth-investment fund, which it plans to use in the US, India and China.
- Accel India, one of the earliest backers of Flipkart, recently raised $650 million in commitments for its seventh fund to invest in new opportunities across India and Southeast Asia.
- Sequoia Capital India, reportedly, is also looking to raise $2.8 billion to infuse into Indian and Southeast Asian startups.
Q) The protection of which among the following is important for increasing investment in the country?
- Real estate
- Preferred stock
- Government bonds
- Common stock
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