In spite of Nikesh Arora’s high-profile departure from SoftBank, the unwavering ambitions of the company to invest in promising startups remain central
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While many see Tencent’s potential acquisition of Supercell integral to the former’s plans for world domination in the video game industry, it is a win-win situation for SoftBank Group Corp too.
Having ownership of up to 73 per cent stake in Supercell, SoftBank will be able to invest in more startups with increased liquidity after transferring those stakes to Tencent. In line with that, Masayoshi Son, the founder of SoftBank, has decided to divert his attention to investing in startups, away from video game that was formerly a chief part of its business.
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Increasing focus on startups
SoftBank’s connection to the startup ecosystem began when it held a stake of ownership in Alibaba in 2000. It brings to the fore of our minds how patience is gold, when Alibaba paid out a staggering amount of US$87 billion 14 years after SoftBank’s initial investment in 2000.
As an attempt to repeat this glorious history, Nikesh Arora, who has recently resigned from SoftBank, spearheaded acquisitions of startups dwelling in the on-demand scene, with the likes of Snapdeal and Ola. The former is now the largest online marketplace in India and the latter a “unicorn” startup that provides on-demand transportation and ride-sharing services in more than 100 cities in India.
In spite of Arora’s high-profile departure from SoftBank, the unwavering ambitions of the company to invest in promising startups remain central.
Before this successful string of acquisitions of viable startups can continue, SoftBank knows that it has to cut debt amid mounting losses from Sprint and the US$51 billion acquisition spree it went on previously. More capital needs to be raised in the likely event of a potential acquisition, thus warranting the plan SoftBank has in the pipeway to raise minimally US$7.9 billion in the sales of its shares in Alibaba.
Furthermore, Gungho Online Entertainment, a game developer company under the wings of SoftBank, will be dropped in favour of of the shift in focus onto promising startups.
It is a matter of time before Masayoshi Son goes on another acquisition spree, bagging more startups while further bolstering its position as a formidable Internet giant.
More on-demand startups are acquired
Beyond Asia Pacific, Finnish on-demand home cleaning startup Freska snapped up Wipe, its equivalent in Norway. Prior to this, the abrupt closure of US-backed Homejoy last year gave us the impression of a bleak future trajectory for house-cleaning startups. This verdict turned out to be a hasty one, as the on-demand home-cleaning industry consolidates further.
Moreover, Amazon-backed Housejoy in India has been able to sustain their growth despite many casting doubt on the feasibility of home services following the failure of Homejoy. It has acquired on-demand laundry startup MyWash, adding to its wide repertoire of at-home services like cleaning, plumbing, carpentry, painting and more.
As Housejoy works alongside MyWash, the former is better positioned to provide quality laundry services in an expanding and highly untapped laundry market in India.
In Australia, the on-demand space is also seeing more acquisitions, with the latest being Zoom2u acquiring Sydney-based on-demand shipping startup Fetchh. Where both of these on-demand logistics marketplaces share similarities, their company vision is one of them.
Together, these two startups are passionate about further disrupting the logistics industry to provide faster, more efficient and reliable delivery service to consumers.
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Greater appetite for quick fixes
As our appetite for quick fixes swells, on-demand startups are gaining more traction than before. Their rising popularity, owing to the instant gratification it provides, makes for a huge selling point when it comes to acquisitions.
Amongst numerous on-demand verticals, last-mile delivery and transportation came out on top with DoorDash and Postmates — both delivery startups — and Uber, a ride-hailing app taking the first three spots on Forbes’s Hottest On-Demand Startups of 2015.
Seeing the scalability of on-demand startups, especially with some of them bagging 6 spots on Forbes’ Hottest Startups List of 2015, investors are quick to throw in millions of dollars in their funding rounds. From the looks of it, could acquiring on-demand startups be the way to go in gaining an edge over one’s peers?
There is some pretty good odds SoftBank would also ride on the on-demand wave as it moves to being startup-centric.
Carrie Er is a Marketing Communications Specialist at Arcadier, a SaaS company that powers next generation marketplace ideas. You can follow Arcadier on Twitter, Facebook, and LinkedIn for the latest insights on the Sharing Economy.
The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your article here.
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