MUMBAI Aggressive investment has made SoftBank Group a leading player in India's startup sector. But repeating the billion-dollar success it found in China is going to take time as well as money.
The Japanese telecommunications giant drew stares, and some incredulity, from Indian venture investors when it began scouring the country for promising startups in the summer of 2014. But agents of the company proved adept at plumbing the depths of India's information technology sector, linking up with enterprises in the tech mecca of Bangalore as well as in farther-flung sites, such as the western city of Pune.
By October, the hunt had intensified. During a visit to India that also included talks with Prime Minister Narendra Modi, SoftBank Chairman Masayoshi Son met with dozens of startup founders -- the final stage in a stringent screening process. On Oct. 28, the company announced a $627 million investment in Snapdeal, India's largest online marketplace, as well as a joint investment in ANI Technologies, a ride-hailing service operating as Ola, worth a total of $210 million.
Since then, SoftBank has gained a reputation as one of India's foremost venture investors, helping drive a surge of interest in the country's startups. The companies SoftBank has added to its portfolio have benefited from the telecom's high profile and become some of the most talked-about prospects around.
RISK-TAKER Son has said SoftBank is looking to create a circle of like-minded companies with bold visions for an "information revolution." When he spots a promising partner, he strikes. Hashing out an investment agreement with OYO Rooms, a reservation website specializing in budget hotels, took all of two days.
SoftBank is one of the very few startup investors willing and able to lay down hundreds of millions of dollars in a single go, said Arun Natarajan, CEO of research company Venture Intelligence.
SoftBank's former second-in-command, Nikesh Arora, helped lead the company's Indian strategy after coming aboard in 2014 and continued to do so until his departure in June of this year. But he was not the reason SoftBank came to India, according to Natarajan. "They were in India and continue to be around regardless of Nikesh Arora," he said. Though Son's heir apparent may be gone, the market still expects big things from the CEO and his famed investment savvy.
WAITING GAME It is difficult to assess SoftBank's Indian track record so far, as venture investments typically do not yield results within two or three years. Moreover, SoftBank's purchases "are no ordinary investments," according to Son. The company looks to work with and nurture its partners for a good deal longer than it would take to simply turn a profit on acquired shares.
Still, SoftBank has made a few missteps in India. Some targets, such as OYO Rooms, are developing nicely. But Ola, which Son initially lauded as India's Uber, is now in fierce competition with that very U.S.-based service. The battle between the two has turned nasty, at times ending up in court.
Snapdeal, meanwhile, is struggling to increase its market share amid pressure from Amazon.com. To come out on top, the Indian website needs to offer innovative, high-quality services in a hurry, industry insiders have said.
Son's initial goal in India was to discover "the next Alibaba" -- the Chinese e-commerce powerhouse that SoftBank's early investment helped turn from an unknown entity into a global leader. Hitting on a similar diamond in the rough would more than justify the outlays SoftBank has made in the country so far. But striking it rich in India's fast-paced startup sphere is no easy feat. Son will have to prove himself as adept at turning fledgling companies into successes as he is at spotting the next big thing.