SoftBank plans new venture fund to tap early-stage startups

JP Lee, CEO and Managing Partner of SoftBank Ventures Asia, poses for a photograph at the company in Seoul, South Korea, March 4, 2019. REUTERS/Kim Hong-Ji

SoftBank Group Corp has expanded its appetite for early-stage startups, with a venture capital unit set to launch its biggest fund for early investments as it opens new offices in Asia.

The global fund from newly rebranded Seoul-based SoftBank Ventures Asia will be worth as much as $500 million and could launch next month, its CEO JP Lee told Reuters in an interview.

By contrast, the average size of similar funds raised last year was just over $100 million, according to data provider Preqin.

SoftBank, South Korea’s National Pension Service as well as other companies and asset management firms will provide funding, Lee said, declining to provide further details on investors.

“It’s an important signal within the SoftBank Group that SoftBank thinks early-stage investments are important and will make continued efforts on them,” said Lee.

The move comes as SoftBank rapidly transforms beyond telecoms into a tech investing giant.

In addition to the $100 billion Saudi-backed SoftBank Vision Fund that has made big investments in firms like Uber, SoftBank said on Thursday it was launching a $5 billion fund focused on Latin America.

The bigger remit for SoftBank Ventures Asia, which describes itself as the group’s global arm for early-stage investing, came after a successful presentation to SoftBank founder and CEO Masayoshi Son last October, Lee said.

Tasked by Son to explain why the SoftBank should keep investing in early-stage startups, Lee on a visit to the group’s Tokyo offices invoked the words of Alibaba Chairman Jack Ma: “small guys become big guys”.

In doing so, he harkened back to Son’s most spectacular startup jackpot – his 2000 investment of $20 million in the Chinese e-commerce firm. SoftBank’s current Alibaba stake is worth around $130 billion.

Three months later, SoftBank Ventures Korea was relaunched as SoftBank Ventures Asia and it now plans to open offices and hire investment managers in Singapore and Shanghai. It currently has teams in Seoul, Beijing, San Francisco, and Tel Aviv.

Son provides guidance while individual investment decisions are made by Lee and his team, Lee said. The unit declined to comment on how many new people may be hired.

The unit was born in 2000 at a boom time for South Korean startups, expanding its focus beyond that country in 2011. Around half of its investments have been early stage.

SoftBank Group and its portfolio companies also make early-stage investments. Many of these are not disclosed by SoftBank and lack of clarity on their valuations complicate investors’ efforts to quantify SoftBank’s worth, said Dan Baker, an analyst at Morningstar.

The new fund, called the SoftBank Acceleration Fund, follows the launch of a $300 million China-focused fund in September. The unit, which has $1.1 billion under management, had until then focused on funds worth under $200 million.

To date, the unit has taken stakes in over 250 companies across 10 countries, including South Korean gaming company Nexon Co, which listed in Japan in 2011, and Indonesian e-commerce firm Tokopedia.

It currently concentrates on firms involved in artificial intelligence, connected devices and robotics.

In keeping with Son’s practice of promoting ties between portfolio companies to boost their growth, Lee said Singapore-based used car trading platform Carro, which the unit has a stake in, had been introduced to SoftBank portfolio company Grab for potential collaboration.

And another company it has invested in, camera app operator Snow China, is using technology from artificial intelligence firm SenseTime.

SoftBank and its Vision Fund have invested more than $600 million in SenseTime, valuing it in the most recent round at $7.6 billion, a source familiar with the matter said, declining to be identified because the information is not public. SenseTime declined to comment.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.