Secrets of the giant
The Japanese Softbank is not you average internet and telecom company. Softbank is using its gigantic investment potential, the so-called 100 billion dollar Vision Fund, to build a portfolio of services that will meet the needs of the future.
Over the last couple of years (2013 to today), Softbank has invested over 54 billion USD in 109 companies, of which 33 billion in 2017 (these refer only to the disclosed investment; the value of an additional 19 investments is unknown).
Roughly, Softbank invests in
- Lifestyle: online commerce, gaming, entertainment, food & grocery
- Health: healthcare, life insurance, biotech
- Connectivity: internet, telecommunications, software
- Mobility: ride hailing, connectivity, taxi services, applications
Mobility has been Softbank’s biggest investment sector so far, grossing up at almost 23 billion USD. Within mobility, the investments have gone almost exclusively (22 billion USD) to ride hailing services: Uber, Grab, Ola, Didi and Hike.
Geographically, the mobility investments were done in China (10.5 billion), the US (8.4 billion) and Singapore (2.75 billion). It’s an alarming fact that Softbank has invested less than 10% of its total portfolio in Europe. Most of the 54 billion went to Asia (27 billion) and the US (22 billion). Europe received less than 5 billion, Latin America only 0.1 billion and Africa nothing at all.
The Chinese Tencent has been investing more in Latin America and Africa, but also close to zero in Europe. Both tech companies have similar interests, but surprisingly few common investments in the mobility industry (only Didi, Hike and Olacabs), which indicates that they position themselves as competitors in the sector, rather than complementary investors.
Nail it, then scale it
A famous quote was told by Grab’s CEO Anthony Tan, when meeting Softbank’s Vision Fund CEO and billionaire Masayoshi Son: “Anthony-san, you take my money. It’s good for you. It’s good for me. If you don’t take my money, not so good for you.”
Once Softbank is interested in a company, they put their full weight behind it. They look for late-stage investments only, with market leadership, solid operations and stable teams. By investing, Softbank allows their companies to scale up, but at the same time, the Softbank teams will re-write entirely the business plan. Softbank is known for monitoring their investments with great attention for detail, not allowing any skimming.
Eventually, Softbank aims to become the largest shareholder of the top 100 tech companies. In order to facilitate control, the Vision Fund pushes its companies as much as possible towards mergers (e.g. Uber/Grab) or, alternatively, partnerships.
The Vision Fund itself is also a partnership between various companies and not only funded by Softbank. Other parties with a stake in the fund are: Saudi Arabia’s Public Investment Fund, Mubadala, Apple, Foxconn, Qualcomm and Sharp.
The scale and diversity of investments as well as the ever recurring names and investors, teach us that even Didi, Uber and Grab are mere puppets in a much bigger play. Companies such as Softbank and investors such as Mubadala are in reality designing what tomorrow’s mobility ecosystem will look like.
Their objectives are not merely to move people from A to B; instead, these companies are anticipating a new world of connectivity, increased expenditure in entertainment, a bigger market for healthcare in an ageing society and a blooming period for online commerce. Mobility is a tool, not the end game.