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SoftBank Group's investment firepower has been a force in India, where there was traditionally little domestic risk capital. (Illustration by Eric Chow)
The Big Story

Fallout: SoftBank's next big crisis may be brewing in India

Overfunding and bloated valuations have destabilized the country's startups

HENNY SENDER, Nikkei Asian Review columnist | India

NEW DELHI -- In 2014, Kunal Bahl and Rohit Bansal, the founders of Delhi-based e-commerce company Snapdeal, boarded a plane to Tokyo. Their company had just struggled through a transition from a Groupon-like discount voucher seller to a full online retail marketplace, and had nearly failed -- but Bahl and Bansal had managed to turn it around. They brought in $850 million from major investors, including sovereign wealth fund Temasek Holdings, Ratan Tata, the head of Tata Group, and U.S. chipmaker Intel. EBay even approached Snapdeal with a proposal to acquire the business.

Instead, Bahl and Bansal flew to Japan to meet the global tech sector's kingmaker -- Masayoshi Son, the founder and CEO of SoftBank Group. Even though Snapdeal had pulled in hundreds of millions, investment flows into India were still just a trickle. Chinese giants Alibaba Group Holding and Tencent Holdings were yet to enter the market at scale, and there were few local funds investing in technology. SoftBank was just starting to seek out deals in India, in an early display of its now-familiar playbook: offering to inject vast sums of money, and driving valuations higher than any other investor could offer young entrepreneurs.

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