In the startup world, Japanese conglomerate SoftBank has been an investor with midas touch, turning several of its investments into industry at billion dollar valuations. Beyond the large cheques it has been writing for several startups across the globe, the firm is now looking to set up a fund which focuses exclusively on early stage startups.
A Reuters report quoted Seoul-based SoftBank Ventures Asia CEO JP Lee as saying that the new global fund, SoftBank Acceleration Fund, will be worth as much as $500 Mn and could launch next month.
The fund will be reportedly backed by SoftBank, South Korea’s National Pension Service as well as other companies and asset management firms. “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.
SoftBank Ventures Asia has been describing itself as the SoftBank group’s global arm for early-stage investing. Lee had explained to Masayoshi Son, CEO of SoftBank Group, about why SoftBank should keep investing in early-stage startups.
In India, SoftBank with its $100 Bn Vision Fund has led to several new entries in the unicorn club in the past few years. It has already roughly deployed over $10 Bn in Indian startups to date. out of its $65 Bn-$70 Bn active investments out of the vision fund.
In 2018, SoftBank made two unicorns in India with $238 Mn investment in PolicyBazaar and $1 Bn investment in hotel aggregator OYO. And in 2019, it has already made logistics startup Delhivery a Unicorn with $350 Mn funding. Beyond this, it has also committed $396 Mn to baby products retailer Firstcry.
In the Indian startup ecosystem impact of SoftBank’s new fund, it is to be noted that according to Inc42 DataLabs, from 551 in 2017, the number of seed-stage deals have come down to 331 in 2018 — a 40% decline. On the other hand, the total amount invested in early-stage startups has gone up by a staggering 138%.
At present, there are over 416 venture funds who have a focus on the early-stage startups in India.
The marquee VC funds like Kalaari Capital, Tiger Global Management, Accel Partners India, Sequoia Capital India, Blume Ventures, Nexus Venture Partners among others are already working in parallel with angel networks, HNI’s and corporate investors; and aggressively trying to bridge the gap between early-and late-stage ecosystems.
With SoftBank eyeing a new plan for early-stage investments and the Indian government also removing angel tax restrictions under Section 56 (2) (viib) of the Income Tax Act, 1961, the early-stage funding ecosystem is ready for a big change.