SoftBank bets big on India

Some say this investor could well decide the future of India’s new economy firms.

To be sure, in a short span it has become the biggest investor in the consumer Internet space and has backed nearly half of India’s ten unicorns. SoftBank, with its eye popping investment cheques, has invested over $7 billion in India since 2014 in high-growth startups in e-commerce, ride-hailing apps, budget hotel aggregation and asset managing, grocery delivery services, and payment platforms, among others. In the last one year alone, it invested a whopping $4.3 billion (Rs 27,163 crore) in diverse companies here.

But what is it that SoftBank looks for? While several will say it’s an enigma, from the investments made so far, it seems that SoftBank looks for disruptive, asset light business models targeting huge addressable markets.

Alok Sama, chief strategy officer, SoftBank Group, helps us understand it better.

“The notion of ‘leapfrogging’ is an essential part our Indian investment thesis. For example, SoftBank’s bet is that India never approaches car ownership thresholds experienced in the West, but rather migrates straight to a shared transportation model. Similarly, India will never likely have scaled organised retail in the form of physical department stores, but will gravitate directly toward mobile e-commerce. In finance, credit card penetration rates will likely never approach those seen in the West, but we will move straight to a tech-enabled digital finance model,” says Sama.

These mega trends have led SoftBank to place major bets on Ola, Flipkart and PayTm.

SoftBank continues to be as bullish as it has ever been on India. In 2015, SoftBank Group chairman and chief executive, Masayoshi Son committed to a goal of a minimum $10 billion investment in ten years. Given our pace of commitments, we confidently expect to hit this target well ahead of schedule, says Sama.

“Along with Oyo and Hike, both of whom have developed a uniquely local offering, these investments are the cornerstone of our Indian digital investment strategy,” says Sama.

With its $100 billion Vision Fund, SoftBank seems well equipped to shape a few market leading consumer Internet firms in India, hence the industries themselves, say industry insiders.

(Find a detailed version of the story, and more on SoftBank’s investments plans in India, in our February issue. Subscribe here)