Japanese companies have a reputation for being huge manufacturing corporations owned by cohesive families with a large retinue of employees working with fierce devotion.
Today, another world is emerging, one of the high-tech startups begun by young entrepreneurs who contribute a fresh global outlook and new generational attitudes to the traditional world of Japanese business.
Exemplifying this new entrepreneurship style is Softbank Corporation of Tokyo; a Japanese multinational tech conglomerate, which boasts of a $342.34 billion asset base as of 2020, according to information on its website.
The firm has joined a league with foreign investors who have indicated an eagerness to expand their businesses into Nigeria and other countries in Africa and take advantage of the continent’s market.
Within the last six weeks, SoftBank has led two major capital injection deals in Nigerian start-ups space with the latest being a $200 million injection in Andela, a global engineering talent outsourcing company.
SoftBank’s investment in Andela is the company’s second major investment in Africa following the $400 million Series C round of fintech platform OPay.
This latest investment deal of SoftBank is spearheaded by Masayoshi Son, one of the richest men in Japan, who has a $16.3 billion fortune and owns a $117.5 million Silicon Valley estate.
During the firm’s last annual general meeting, Son described SoftBank as a “capital provider for the information revolution” in the 21st century in the same way that Mayer Amschel Rothschild was a capital provider for the industrial revolution in the 19th century.
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“In the industrial revolution, one of the main players was Rothschild,” Son said, using one of the quirky slideshows that SoftBank has become well known for to illustrate his points. “We would like to be the capital provider for the information revolution. That is our new definition or new positioning I would say to describe SoftBank Group.”
SoftBank has invested in 264 companies through its two Vision Funds, as well as a dedicated Latin America fund.
“The majority of the companies are not actually making money,” Son said. “We are taking risks and at the same time providing funds as a capital provider.”
Net Asset Value (NAV) is a key metric that SoftBank focuses on when measuring its own performance, Son said. At the end of March 2021, SoftBank’s NAV was about $235 billion.
The billionaire said many people have asked him over the last three or four years what SoftBank Group is, with some telling him they like him “very much” as an entrepreneur but not as an investor.
“Actually, I am not a simple or a traditional investor compared to the others,” Son said.
Masayoshi Son also told shareholders at the AGM, he would start making personal investments alongside SoftBank Group Corp.’s Vision Fund, a controversial step many analysts say could lead to conflicts of interest as his company backs tech startups.
The Japanese billionaire explained he will begin co-investing in Vision Fund 2, an investment vehicle where SoftBank has been the sole source of capital. The fund can invest up to $2.6 billion and will own 17.25percent of the capital. It will have a similar agreement with SoftBank’s Latin American fund.
Analysts and fund managers wondered why the billionaire would opt for such a structure given the potential for confusion and conflict.
Defending the decision, Son said the SoftBank board approved the structure, while he recused himself from the vote.
“Because I think I want management to share the investment risk,” he said. “Through thick and thin, one thing doesn’t change – my belief that the AI revolution will absolutely continue for the next 10 to 20 years.”
Having funded nearly 30 of the more than 600 unicorns in the world, which are companies worth over a billion dollars, the Japanese telecom giant has been on a shopping spree, seeking promising new AI startups to bet big on, often with celebrities on board.
Today, the “information revolution (is) in full bloom,” according to Son, who said artificial intelligence, is a particular area of focus for SoftBank.
“We believe we are the biggest in terms of providing capital,” he said on AI, adding that driving, healthcare, retail, finance, and education will all be redefined by AI in the years ahead.
In the industrial revolution, manpower was replaced by machines, Son said. “In the information revolution, AI will be the one replacing machinery,” he said.
Apart from SoftBank, other multinational companies from the United States, Japan, and Latin America are also investing or expanding their businesses into Nigeria, to take advantage of the country’s over 200 million population market.
These foreign investors are betting big on young entrepreneurs who are stepping into voids left by unimaginative public policies and shoddy infrastructure.
In the first half of 2021, FairMoney, a Nigerian fintech, raised $42m in a funding round led by Tiger Global Management, a New York hedge fund. FairMoney has received the go-ahead from Nigeria’s central bank to take deposits. Last year it disbursed small loans averaging $65 and worth a total of $93m to roughly 1.3m people and microenterprises.
Interswitch, a digital payments platform, gained its unicorn spurs when Visa bought a 20 percent stake in it for $200m in 2019. Flutterwave, which has offices in Lagos and San Francisco, hit the $1bn mark in March when it raised $170m from US investors.
