Historical
SoftBank – which has been one of the protagonists of the global innovation ecosystem, with investments in now giant companies such as Uber, DoorDash, Coupang, Alibaba – is not so new in the history of Latin American venture investment. In fact, in 2000 the company entered the region with SoftBank Latin American Ventures focused on internet startups.
The firm, however, began to invest more strongly in Latin America with the creation of its first Latin American Fund in March 2019, with a bet of US $ 5 billion in the region.
Currently, the firm has invested US $ 3.5 billion in 48 companies with a valuation of approximately US $ 6.9 billion.
Among the companies in the portfolio are 15 of the 25 startups Latin American unicorns (companies with a valuation greater than US $ 1 billion). For example, in August of this year it invested in Unico, the recent Brazilian unicorn that focuses on authentication, and also counts in its portfolio startups such as the Mexican companies Kavak and Clip (valued at US $ 4,000 million and US $ 2,000 million), the Brazilian PetLove and Creditas (US $ 5,250 million and US $ 1,750 million) and the Argentine Ualá (US $ 2,450 million).
Additionally, SoftBank has also invested in startups what did they do exit (when the investor sells the equity startup). Among them are Vtex, the Brazilian company of e-commerce, and the Brazilian education company Afya, which have gone public, and startups such as 99, the Brazilian logistics company, which was acquired by the Chinese DiDi.
“Without a doubt, it has allowed the venture capital industry to accelerate,” says Andrés Castillo, who adds that, in the region, investments in early stages (seed or A) did not have the capacity to multiply the value of their investment in subsequent rounds. , since the ecosystem did not have capital large enough for the following stages. “The two Sofbank funds for Latin America have contributors from large technology companies with a lot of capital, in addition to having a sovereign fund from Saudi Arabia present,” he adds.
His extensive investment, which characterizes him so much, has also been the target of criticism by some agents of the innovation ecosystem. SoftBank detractors point to investment errors such as WeWork, as well as the FOMO strategy (Fear of Missing Out) which, according to Castillo explains, is “investing in all startups from a certain level upwards and expecting them to compete with each other and keeping the big winner”.
This is the case of startups such as Uber, Didi and Rappi, logistics companies that are in the SoftBank portfolio but are competitors in different parts of the world, or the case of Loft and Quinto Andar, both Brazilian companies from the Japanese firm’s portfolio. , but they are from the same property industry and operate in the same country.
For the expert, the strategy could generate positives as well as negatives in the region: “Access to greater capital will allow financing the scaling of startups throughout the region and, doing it across the board, means that there is no single leader. But at the same time, big capitals can provoke price wars between companies. startups, eliminating eventual competition, instead of concentrating on improving their services, or obtaining a profitable business model ”.
Despite the concerns, the experts consulted agree that the SoftBank effect is more positive than negative in the region, given that it will continue to allow companies to startups finance and grow.
“In Latin America it is still early to say if their investments are successful or not. However, 15 startups invested by SoftBank are already unicorns, which is a very good sign. When these companies manage to reach an IPO in the United States, it will be the final consolidation of the fund focused on startups in Latin America ”, says Herrera.
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