softbank

According to a recent report on a website, Japan based SoftBank Corp., which is known in India for its generous investments in several Indian startups, is planning to close down its venture capital arm and avoid making risky investments in early stage startups. It plans to shift its focus from early stage to more established and less risky companies.

By pulling the plug on SoftBank Capital, the parent company has decided to ditch the approach that resulted it in yielding record returns in China based Alibaba Group, one of the world’s most valuable Internet companies now. SoftBank Capital was one of the initial backers of the China based Internet startup in 2000 when the startup was just a year old.

The Japanese based firm is the biggest investor in two of India's most valuable and famous startups, cab hailing service app Ola and e-commerce site Snapdeal. SoftBank has already invested more than $1 billion in these two startups till date.

According to SoftBank president Nikesh Arora's statement to a website, “As we look at the future for the next tens of years, we believe that the way to preserve the long-term sustainability of SoftBank is to be large, minority shareholders of many assets. We believe that it’s less crowded in the large-check marketplace."

“As we build SoftBank 2.0, we increasingly believe that our future lies in a smaller universe of companies, which pioneer breakthrough innovation and have the potential to be market and category leaders,” said a spokesperson for the Japanese firm. “We want to work with them closely and guide and support them to success, as we have done with Snapdeal and Ola, and many others. We also think having a diversified portfolio including mature companies and in some cases, exceptional early-stage companies, is key to SoftBank’s long-term viability. We continue to be very excited by the possibilities that India offers.”

SoftBank Capital’s early-stage team, will not raise any new funds and nor make any new investments out of its $100 million 2014 investment fund. It will, however, continue making follow-on investments in current portfolio companies.

How does SoftBank's this change in strategy going to affect India is a little early to predict. Keep watching this space to know more on the same.

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