After a dry spell, SoftBank rides the AI wave to power India story

After a year of quiet, Japanese investor returns to investing with $75-125 million AI push

Even as SoftBank’s Founder and Chief Executive Officer Masayoshi Son, seeks $100 billion to build a new venture in AI chips, the firm will kick off its AI-focused investment in India in 2024.

The Japanese investor, which has not signed any cheques for the past 12 months in India, will begin its investment cycle by May/June this year. Sources in the know also confirmed that the company will look at investing in the range of $75 million to $125 million per investment.

An email sent to SoftBank remained unanswered until the time of going to press.

“As SoftBank readies fresh investments in India, it is betting on one of the potentially most significant AI deployments in the world’s most populous and fastest-growing major economies. While SoftBank was the first mega-investor to espouse AI, it will be the predo­minant theme in writing new cheques,” said a source in the know.

Sources in the know also added that SoftBank is nudging portfolio companies to align their capital expenditure with the AI-led transition. 

“The critical issue is to sync it with the speed of AI adoption. The reason: companies across industries would lose if they don’t ride the AI wave,” said another person in the know.

Last October, SoftBank India took a group of 20 portfolio founders and CXOs on a two-day AI tour in Silicon Valley. The tour supported SoftBank’s portfolio companies’ initiatives to infuse AI into their product offerings. Participating portfolio companies included Lenskart, Meesho, Icertis, Unacademy, Ola Electric, Eruditus, Whatfix, Mindtickle, InMobi, and Sense HQ.

SoftBank’s top deck has repeatedly called India the best-performing market for its Vision Fund investments. SoftBank Vision Fund has invested about $11 billion in India. It has recouped $6.2 billion and still has significant holdings in 22 companies, some of which are tapping into the listing market. The fair market value of the current investments is pegged at $14 billion currently.

India’s AI startups have a lot to offer; while many are being AI-first in business models, players like Krutrim and Sarvam are developing India-specific large language models and AI deeptech. However, the excitement in India is about the size and scope of AI deployment in arguably one of the biggest consumer data markets.

Add to this India’s foundational digital infrastructure as a public good could hasten AI adoption well above the global growth forecasts.

Seven years ago, Son talked up AI as the most consequential of all the information revolutions to date. After pouring more than $140 billion in investments and enduring a bruising tech winter, Son’s belief is beginning to pay off.

Last week, SoftBank reported a $6 billion quarterly profit after a series of setbacks amid a broader tech meltdown.

An AI-galvanised tech rally has lifted public market valuations. SoftBank shares are back to levels not seen since 2021, riding on an explosive surge in chipmaker Arm’s market value.

According to a Bloomberg report, SoftBank is considering creating a $100 billion chip venture that would supply AI-enabling semiconductors. The project is codenamed Izanagi. The firm is seeking to foray into AI chips to compete with Nvidia Corporation.