(Bloomberg) — SoftBank Group Corp. is lining up startup investments in Japan, aggressively pursuing entrepreneurs in its home market for the first time since the Vision Fund’s launch.
The Japanese startup scene is going through a revival, helped by an influx of young talent from private equity funds and consulting firms, said Kentaro Matsui, a managing partner at the Vision Fund who overseas Japan investments. Combined with a shift in strategy to invest smaller sums than its previous threshold of $100 million, this has meant more opportunities for the world’s largest tech fund to invest at home, he said.
Japan’s weight in SoftBank’s overall portfolio will “definitely” increase, Matsui said in an interview in Tokyo. “The caliber of people in the companies we are investing in is clearly different” compared with 2018 or 2019, he said. “They’re way more sophisticated now.”
Matsui’s remarks highlight SoftBank’s ambition to boost investments at home even as tech valuations abroad tank, hurting its earnings. The company next month may report its biggest-ever quarterly loss on the plunging value of its most valuable holdings, including South Korea’s Coupang Inc. and China’s Didi Global Inc., estimated Kirk Boodry, an analyst at Redex Research who publishes on SmartKarma.
Its newfound interest comes after years of criticism in Japan of an unprecedented investment spree that’s bankrolled some of the world’s highest-profile startups from Alibaba and Uber to Didi — while all but omitting its own backyard.
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SoftBank said on Tuesday it will back AI Medical Service Inc., a Tokyo startup specializing in endoscopy, in the Vision Fund’s third deal in Japan. This comes on the heels of investments late last year in Aculys Pharma LLC., which has the rights to develop and sell pitolisant for treating narcolepsy and sleep apnea in Europe, and Soda Inc., a startup that operates an online marketplace for sneakers and streetwear.
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While looking across all industries,, medical technology, software-as-a-service and robotics are among the key areas of interest for SoftBank, Matsui said. A fourth investment in Japan will be announced soon, he added, declining to elaborate. SoftBank has recently expanded its team dedicated to investing in Japan to six members — four Japanese and two Korean, including Matsui.
AI Medical’s potential to expand globally was a key reason behind SoftBank’s decision to finance the startup, he said. AI Medical uses artificial intelligence to diagnose gastrointestinal diseases and plans to enter the Singapore market in the near future, while also preparing a U.S. launch.
“There are more startups that are extremely interesting,” in Japan, said Matsui. “We have a lot of potential investments in the pipeline.”
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