Softbank Capital, the venture arm of Japanese investment giant Softbank Corp. is winding down operations in what is being seen as a move towards a new strategic direction, following Nikesh Arora’s ascension as the company president.
Business Pundits are taking this as a sign that, instead of a lot of small or medium investments in start-ups and sorts, the company will now focus on acquiring shares in large and mature businesses. Speaking to the Re/code, Nikesh Arora, a former high-powered Google executive, more or less confirmed it when he stated that,
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,
further adding that
We believe that it’s less crowded in the large-check marketplace, and it’s a smaller universe of companies we have to understand and support.
which means that start-ups will have to look elsewhere to receive any capital, although Mr. Arora did speak of exceptions to the rule.
This change in strategy also precedes an overhaul of Softbank capital operations, with no new fundraising in the near future. The division’s early stage team for example, which dealt mainly with brand new start-up in need of capital funding, will neither raise any new funding nor will it make any new investments from its $100 million 2014 investment fund — choosing to focus instead, on the current portfolio companies raising new rounds of funding.
Softbank is an early-stage investor in digital media startups like The Huffington Post, Buzzfeed among others.
Another $250 million Softbank Capital fund has already been committed by either direct investment or by reserving it for later, for follow-up investments in companies such as Fitbit and Criteo.
There is also a third fund, focused exclusively on investing in New York startups and is committed to making new as well as follows up investments. This apparent difference from the company policy arises due to the fact that the fund — being managed by Jordy Levy and Josh Guttman — was not bankrolled by the SoftBank parent company and as such is likely to make new investments under a non-SoftBank name.
Softbank will also be transferring the management and administration of its 2010 and 2014 early-stage funds to Lerer Hippeau Ventures with SoftBank Capital partner Marissa Campise, moving to West Coast to chase bigger fish directly under Arora.
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