Why has Japan’s Softbank hit pause on India e-commerce investments?


Japan-based Softbank closed 2014 with the ‘largest investor in Indian e-commerce’ label, investing nearly $1 billion in the sector. The Masayoshi Son-led firm closed 2015 by doubling that investment to $2 billion.

However, since January 16, 2016, when Masayoshi Son was in India to attend the Prime Minister Narendra Modi-led ‘Start Up, Stand Up India’ event, Softbank seems to have tightened its purse strings for India.

In 2014, Softbank snapped up stakes in Snapdeal, Housing.com, and Ola, investing nearly $1 billion to become the largest investor in Indian e-commerce companies, a report by Business Standard said in December 2014.

In 2015 alone, previous media reports reveal that Softbank made investments in Indian e-commerce companies in atleast five out of 12 months in 2015, sometimes investing in up to two e-commerce companies in one month.

Softbank has investments in several Indian e-commerce companies, including Snapdeal, Ola, Oyo Rooms, Grofers, Housing.com, InMobi, Paytm, ScoopWhoop, and even a solar power project.

Son had initially said that Softbank would be investing $10 billion in India over ten years. But at the rate of $1 billion in the first year and $2 billion in the second year, he said in January that he was confident that the number will only go higher.

Softbank President Nikesh Arora told NDTV in August 2015 “India’s time has come. There will be a huge amount of growth in the next 10 years in India. Start-ups will create a new kind of consumerism in India.”

But since then, despite Son’s bullish comments at the Start-up event in January and his revelations about the performance of the Indian companies while declaring its quarterly earnings on May 10, there have been close to none investments in India from Softbank.

The only investment accounted for in 2016 is the one made by one of its subsidiaries — Softbank Ventures Korea (SBVK) into True Balance, an integrated prepaid mobile balance application in March. The India-based company, led by a Korean entrepreneur Charlie (Cheolwon) Lee raised a series A funding from Softbank.

While there’s no particular reason given by the Japanese firm for this, we may see the lull period coming to an end soon as Finance Minister Arun Jaitley heads to Japan for a six-day visit on Saturday event. While in Tokyo, the union finance minister is expected to meet Masayoshi Son to discuss investment opportunities in India.

Softbank 2015 investments in Indian e-commerce companies Total investment in 2015: $2 billion
January Housing.com – 2nd round
June Pledge to invest $20 billion in solar projects
August Oyo Rooms; Snapdeal (2nd round)
November Ola (2nd round); Grofers
December Solar power
Softbank 2014 investments in Indian e-commerce companies
*Total investment in 2014: $1 billion