SoftBank isn’t a company that shies from controversy. Its $9.5 billion rescue deal for WeWork caused major concern—especially given former CEO Adam Neumann’s $1.7bn payout, and operating losses totaling $1.25bn. So shaky did the deal seem, that SoftBank CEO Masayoshi Son took to a Tokyo stage to blame his own judgement regarding Neumann and his giant real estate venture.
That tale—and the decimation of SoftBank’s investment in Uber—contributed to the Japanese vehicle’s announcing a $6.5bn quarterly loss this month, its first in 14 years. Investors like Capital Group and Tiger Management are grumbling. Little wonder Son and co are looking at one of tech’s most maligned regions.
The SoftBank Innovation Fund (SIF) is, according to the company’s website, “the largest-ever technology fund focused exclusively on the fast-growing Latin American market.” It aims to capitalize on several factors unique to the region. Latin America’s middle class has swelled by 50m people since 2000, while over 375m Latin Americans currently use the Internet. E-commerce and digital finance have boomed of late, with 79% of the region’s citizens now living in urban areas with high levels of connectivity.
The fund is currently pegged at $5bn, having begun at $2bn. And it has wasted no time making some striking investments. Yesterday the fund led a $140 million investment in VTEX, a Brazilian e-commerce platform used by Walmart and Sony, amongst others. The SIF has already paired with Chinese investment giant Tencent to put a combined $150m into Argentine fintech outfit Ualá.
The SIF’s expansion also includes the Brazillian fintech startup Creditas (a total shared investment of $231m), compatriot real estate tech startup QuintoAndar (a total shared investment of $250m), and Columbian delivery service Rappi, where alongside SoftBank Group Corp, SIF has invested $1bn.
In addition to pumping cash into regional startups, SoftBank is courting local venture capital funds—many of whom have a good profit potential thanks to Latin America’s relative infancy comparative to other global regions. Bureaucratic issues, such as a requirement for capital funds to accept non-compete clauses before investment, have traditionally held Latin America back. Yet Kazek Ventures, from Argentina, and Brazilian outfit Valor Capital have signed with Son’s new fund.
“Growing up in Latin America I witnessed firsthand the creativity and passion of the people,” said Marcelo Claure, CEO of SoftBank Latin America, the wing responsible for the fund’s oversight.
“There is so much innovation and disruption taking place in the region, and I believe the business opportunities have never been stronger,” he added. “The SoftBank Innovation Fund will become a major investor in transformative Latin American companies that are poised to redefine their industries and create new economic opportunities for millions of people.”
Considering Latin America will be home to a SaaS market worth $5.3bn in 2022, up from just $1.5bn in 2017, it seems getting out ahead of the competition could go a long way to redeeming Son’s (freshly) tarnished image. Only time will tell whether his latest goose begins delivering on its golden eggs.