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SoftBank CEO offers glimpse of deal logic with new AI investment

Son doubles down in battle to dominate world of ‘digital workers’

SoftBank Group CEO Masayoshi Son speaks during a conference on June 13 in Tokyo (photo by Wataru Suzuki)

TOKYO -- SoftBank Group CEO Masayoshi Son on Thursday said its near $100 billion technology fund is stepping up its investment in U.S. software unicorn Automation Anywhere, in a bid to dominate the future of artificial intelligence by taking on one of the world's most highly valued AI companies.

“We agreed yesterday to increase the amount of investment,” Son said during a conference organized by Automation Anywhere in Tokyo, without specifying a figure.

SoftBank’s Vision Fund invested $300 million into the automation software company last November, four months after Goldman Sachs and others injected $250 million. The company, which last year was valued at close to $2 billion, is aiming to raise more than $550m million in the latest funding round.

Son is racing to demonstrate that investing huge sums on disruptive technology companies will create champions in emerging industries, as he prepares to launch a second $100 billion fund. His investment in Automation Anywhere -- after a rapid three day due diligence process -- offers a rare glimpse into how that new fund will be invested.

The pledge to put more money on the table comes after Automation Anywhere's biggest competitor, New York-based UiPath, announced a $568 million funding round in late April. The round, led by U.S. hedge fund Coatue, gave UiPath a valuation of $7 billion, making it one of the most valuable AI companies in the world. 

In an interview with the Nikkei Asian Review, Automation Anywhere CEO Mihir Shukla signaled that the company's next funding round would be larger than the amount raised by UiPath.

“Our first round was $550 million and you can only imagine what the next one would be,” he said, while noting that UiPath’s recent raise was a later stage of financing. Companies generally raise more capital in subsequent funding rounds. 

Automation Anywhere CEO Mihir Shukla speaks during a conference in Tokyo on June 13 (photo by Wataru Suzuki)

The companies are battling for supremacy in robotics process automation, or RPA, which automates mundane tasks of white-collar workers like taking a handwritten application form and manually typing in the contents into a database. 

While the industry itself is not new, companies like Automation Anywhere and UiPath are now infusing artificial intelligence into the software in an aim to automate more complex tasks, essentially creating a ‘digital worker’. For example, when a homeowner upload photos of rooms to room sharing apps, RPA software can automatically detect TVs and air conditioners and make them searchable.

Son reiterated that Softbank's domestic mobile carrier unit, SoftBank Corp., would use Automation Anywhere's software to automate some 4,000 jobs. Employees who were performing simple tasks would not be laid off but transferred to new group companies, he said. 

Both Automation Anywhere and UiPath claim leadership in what is still an emerging, but rapidly growing market. Analyst estimates for the size of the market range from several billion to $1 trillion. 

Shukla said his company has deployed 1.2 million pieces of software, or ‘bots’, across 2,800 enterprises globally. Automation Anywhere has been expanding in Asia including in Japan, which it entered last year and where it already has 300 customers. The group does not disclose revenues or profit.

Son set up the Vision Fund in a bid to create a network of companies that he believes will lead in the age of AI. The fund, backed by Saudi Arabia and Abu Dhabi as well as SoftBank’s own capital, has spent more than $60 billion in about two years, with investments ranging from U.S. ride sharing giant Uber Technologies, Chinese used car sales platform Chehaoduo and Brazilian gym membership company Gympass

On Thursday, Son spoke about how he arrived at the decision to invest in Automation Anywhere. He said asked three AI companies to conduct extensive due diligence on about ten potential investments, of which the startup was one. The AI businesses were to judge which one would become the most powerful. He gave them just three days to decide. 

“They asked, what is the reward? I said, 300 million yen ($2.7 million),” Son recalled. “They said, not too bad.”

When the contest resulted in a tie between Automation Anywhere and another candidate, "I used my intuition,” he said. “[I asked] will you dedicate your passion to AI, did a lot of interactions. I made a final decision, and invested big.”

The episode illustrates how the Vision Fund ultimately relies on Son’s instinct. He is best known for a wildly successful investment in Alibaba Group Holdings, now one of the most valuable companies in the world. Other bets, like a bid to take on the U.S. mobile market with the acquisition of local carrier Sprint, have been more controversial. 

Japan and South Korea are expected to be major RPA markets, as companies try to deal with shrinking workforces as well as break with a tradition of notoriously long working hours. 

Shukla said Automation Anywhere has nearly 200 employees in Japan and this would increase to 1,000 in the next three years. 

Meanwhile UiPath, which entered Japan in February 2017, has 270 employees in the country, according to a spokesperson. 

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