 "I believe in India's future, will support with investments: Masayoshi Son")
SoftBank Group founder Masayoshi Son said that he believes in the future of India, which is going to be bright and he believes in the passion of the young entrepreneurs in the country.
“India will be great. There's a bright future. I tell young people in India let's make it (innovation) happen. I would support,” said Son at InFinity Forum organised by International Financial Services Centres Authority (IFSCA) and Bloomberg. “I believe in the future of India. I believe in the passion of young entrepreneurs in India.”
The discussion was about his vision as investor behind the $100 billion Vision Fund, the world's largest tech-focused investment fund, on creating a level playing field, and looking beyond the short term to develop the FinTech industry across the world, and harnessing it for global good.
Several years ago, Son said when Prime Minister of India Narendra Modi came to Tokyo, he met him there. “I said ‘I believe in the future of India and I'd like to invest’. He met other big-shots in Japan and he didn’t know me (well) enough. But I gave him the biggest commitment that I would invest $5 billion in India,” said Son.
Now after 10 years, Son said SoftBank has already invested $14 billion in India. “We are the biggest foreign investor in India. This year alone, we invested $3 billion into India. We provide about 10 per cent of the funding of all of the unicorns in India,” said Son.
In India, SoftBank has backed many companies and unicorns or startups with over $1 billion in valuation. These include Paytm, Oyo, Ola, Lenskart, Policybazaar, FirstCry, Meesho, Unacademy, Zeta, Swiggy, Ola Electric and InMobi.
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This July, food delivery firm Swiggy closed a $1.25-billion fundraise, marking the first investment in the category by SoftBank Vision Fund 2. This took the valuation of the Bengaluru-based startup up by more than 50 per cent to $5.5 billion from $3.6 billion earlier. In September this year, social e-commerce start-up Meesho raised $570 million, led by Fidelity Management & Research Company and B Capital Group, a venture capital firm co-founded by Facebook Co-Founder Eduardo Luiz Saverin and existing investors including SoftBank. In September this year, edtech startup Unacademy became a unicorn after it raised $150 million in a round led by Japanese conglomerate SoftBank valuing it at $1.45 billion, a three-fold jump in just six months.
“Some of those companies in which we have invested have created one million new jobs in India,” said Son. “When I first met Mr. Modi ( Prime Minister) this was zero.”
According to the sources, SoftBank could invest over $4 billion in India this year in the technology sector. These include edtech, healthtech, e-commerce, B2B marketplaces and software-as-a-service (SaaS). The investments will come from SoftBank's Vision Fund 2. It has an investment outlay of up to $30 billion for this year.
The Industrial Revolution occurred approximately 200 years ago. It was not possible only due to inventions such as the steam engine or Henry Ford starting Ford Motor Company. But, Son said they took the risk of investing capital, when innovations had not been proven. “Inventors, entrepreneurs and capitalists took the risk and then the Industrial Revolution happened.”
"Now we are living in the Information Revolution age and there are great entrepreneurs, inventors and business models. I would like to support them by providing the risk capital, when the things have not been proven yet,” said Son.
He said SoftBank is crazy enough to believe in their vision and sometimes it loses all the money it has invested and sometimes also gets a great return. “Overall our return is bigger than the loss,” Son added.
There is a difference between investors and capitalists. Investors invest to make money and for them interest rates, currency exchange and employment rates are important. Those are not the important parameters for capitalists like Son or SoftBank officials, who are more focused on technology, new business models and innovations.
“We're not trying to make money. We're trying to make the future,” said Son, who wants to be viewed as the 21st century Rothschild of the Information Era. This is like how Mayer Amschel Rothschild was a capital provider for the industrial revolution in the 19th century.
In this era, when people value instant gratification, what does it take to make long term bets and how does one balance the near term results with long term progress? Son said his organisation gets criticised every 3-4 years when the stock markets go down. But Son reminds himself about the long term goal of creating a future for mankind. “For short term criticism, I don’t care,” said Son. “Because of our long stance view, our return on investment for the last 20 years is 43 per cent compounded for 20 years. We have got the highest return for the 20-year scale.”
When Son was a boy growing up on Japan's southern island of Kyushu, he had a notebook to write down new inventions he hoped to create one day. As a student, he invented an electronic translator that he sold to Sharp Corporation, making his first $1 million. He said now younger people are fortunate as when he was young venture capital was not available to him. “I had to go and borrow money from the bank, begging every month,” said Son. “Today, if you're just a college student or come from a humble home. But if you have ideas, a vision and lots of passion and can bring your friends and partners to create a business plan and prove a little bit to the investors, the money would come. Money is no longer a constraint. It's just your dream, passion, intelligence and focus. That's all it takes to have a big dream come true.”
SoftBank has backed cutting edge innovations like it has a stake in self-driving car maker Cruise, which is majority-owned by General Motors Co. This firm had been testing self-driving cars in California. It has also backed the autonomous driving business of China’s Didi Chuxing. However, innovations related to job creation may be more relevant in emerging countries including India than driverless cars, how is SoftBank addressing such issues?
Despite the travel restrictions due to the Covid-19 pandemic, Son said he is investing in many such countries including Africa. “It's so far away to meet with those entrepreneurs. But because of the Zoom communication, we can see them now and they can make the presentation,” said Son.
These are ventures related to fintech like lending, education, e-commerce and distribution. He said the digital divide is more due to the boundaries in the heart of the people. “People in Africa and many other countries have smartphones. You can reach (anywhere) from your handheld device and can get funding from worldwide.”
When Son was a teenager, he was obsessed with meeting his idol, the Japanese entrepreneur Den Fujita, famous for heading McDonald’s Japan and was inspired by his book. He wanted to seek his advice. But he went through a lot of challenges to talk to him including a long list of rejections and an expensive phone bill. So Son flew to Tokyo and showed up at Fujita’s office and told the officials there that he only wanted to see the face of Fujita for 3 minutes.
At the InfinityForum event, when asked about the businesses that would thrive for the next 50 years, Son said here entrepreneurs need to pursue their passions, interests and dreams and where they don’t get bored in the next few years. He said the biggest cause for the business failure is the entrepreneur getting tired of the venture after facing difficulties. “If you don’t get tired and maintain your passion intellectually and physically, you can overcome them,” he said.
But despite the passion, the success rate for many ventures is little. When asked about how to deal with volatility and the possibility of failure, Son said, “dream big, focus and go at it and don’t back off.” He said everything else is available including money, human resources and customers.