TOKYO -- SoftBank Group has made a rare early investment in a startup launched by Vishal Sikka, former CEO of Indian IT services giant Infosys, in a sign that the Japanese technology group is willing to back companies that are far away from an IPO.
SoftBank's Vision Fund 2, which is entirely funded by SoftBank, recently joined a $140 million funding round by Vianai Systems, a Silicon Valley-based artificial intelligence software company founded by Sikka in 2019. It was the startup's second funding round, marking a departure from the Vision Fund's conventional strategy of investing in late-stage companies that are nearly ready to go public.
In an interview over Zoom, Sikka said Vianai plans to use the proceeds to roll out its initial batch of AI software products, which he said will help companies improve decision-making, "in the next six to 12 months." The company will also invest in expanding its organization from its current 50 employees or so, who are spread across the U.S., Israel and Europe, by hiring in Asia.
"We are not even close to the point where AI can replace human judgment," Sikka said. "However, what we have seen in the last several years is that we can build AI systems that have tremendous sensory ability, ability to do recognition, classification and sense-making. We deeply believe that for the next 20 years, the best use of AI is in amplifying human judgment."
Sikka was the chief technology officer for German software company SAP before taking the helm at Infosys in 2014. He left that position in 2017 after a bitter and public feud with a co-founder. He then launched Vianai in 2019, raised seed money of $50 million and began developing AI systems for companies like U.S. bank BNY Mellon, which wanted to predict which trades will fail.
There are only 300,000 AI engineers globally, although there is demand for millions, according to a Tencent report in 2017. U.S. and Chinese tech giants spend heavily to recruit top talent, making it difficult even for even big companies to incorporate AI into their businesses. Creating software that helps more people in the organization use AI systems was the initial aim for Vinanai.
When Vianai entered talks with SoftBank, it had already received commitments from other investors for the majority of the capital it wanted to raise. SoftBank ended up contributing "a very large part" of the funding round, Sikka said, resulting in Vianai exceeding its initial fundraising target of $100 million.
SoftBank Chairman and CEO Masayoshi Son has said the "AI revolution" is his next big bet. His group raised more than $50 billion in the fiscal year ended in March by selling parts of its telecommunications assets as well as by making a string of deals to sell part of its stake in Alibaba in the future. It has funneled some of the proceeds and doubled down on Vision Fund 2, and has committed another $30 billion to Vision Fund 2, bringing its total size to $40 billion.
Vision Fund 2 has been stepping up investments in enterprise software startups. Earlier this month, it led a $90 million funding round for Whatfix, which helps companies increase the adoption of software among its employees by adding navigation. Co-founder Khadim Batti, who was an early employee at Huawei Technologies' R&D center in India, said SoftBank's backing will enable the company to expand into non-English speaking markets like Germany, South Korea and Japan.
Sikka said Japan could be one of the biggest beneficiaries of AI, due to its rapidly aging population. But expertise will likely have to come from outside the country. "Japan was one of the leading places for AI back in the 1980s and '90s," he said. "And now, this current generation of AI is significantly different. It's more heavily influenced by the use of neural networks and deep neural networks for computer vision."