Why SoftBank is loaning its employees $20bn for reinvestment
Japanese conglomerate SoftBank is reportedly planning to loan employees $20bn to invest in its latest fund.
As reported in The Wall Street Journal, according to “people familiar with the matter” CEO Masayoshi Son could account for $15bn, with employees making up the remaining $5bn. Masayoshi Son is, according to Forbes, Japan’s second richest man, with a net worth of $22.2bn.
The move comes after the July announcement of the Vision Fund 2, with the company saying at the time that it had secured funding, and investing $38bn of its own money. With the $20bn loan on top of that, the company would be providing around half of the funds, with the loaned amount itself making up a fifth.
Other participants in the fund include Apple, Foxconn, Microsoft, Mizuho Bank, Sumitomo Mitsui Banking Corp, and Standard Chartered. There was, however, a certain nebulousness to the involvement of some investors, a mystery which would be solved by the revelation.
The original Vision Fund was by most accounts a success, used to invest in a number of tech companies, such as $9.3bn in Uber. That investment has since run into problems, however, with shares down 30% since the company’s May IPO, and perhaps serving to spark worries about the long term sustainability of technology investment.
At the time of its announcement, Vision Fund 2 was said to have more of a focus on the development and advancement of AI, differing from the original.
The Wall Street Journal further reported that similar measures were taken for its first fund, with roughly $8bn of loaned money involved. The loans were said to have an interest rate of 5% – while TechCrunch quoted Masoyashi Son as saying that the first fund’s value was up by 45% in May.
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.