Press release: SoftBank Group Corp. Announces Launch of New $5 Billion Technology Growth Fund for Latin America
SoftBank Group Corp. (“SBG”) today announced the launch of the SoftBank Innovation Fund, the largest-ever technology fund focused exclusively on the fast-growing Latin American market, and the creation of the SoftBank Latin America Local Hub, a new operating group that will partner with SoftBank portfolio companies helping them enter Latin America, navigate the local markets and broaden their geographic reach in the region.
Marcelo Claure will serve as Chief Executive Officer of SoftBank Latin America, responsible for overseeing the new fund, its investments and operations. Mr. Claure will also continue to serve in his current roles as Chief Operating Officer of SoftBank Group Corp., Chief Executive Officer of SoftBank Group International and Executive Chairman of Sprint Corporation.
SBG has committed an initial $2 billion to the SoftBank Innovation Fund and will serve as the General Partner. No decision has been made as to the location of the SoftBank Innovation Fund’s headquarters.
Masayoshi Son, Chairman & Chief Executive Officer of SBG, said, “Latin America is on the cusp of becoming one of the most important economic regions in the world, and we anticipate significant growth in the decades ahead. SBG plans to invest in entrepreneurs throughout Latin America and use technology to help address the challenges faced by many emerging economies with the goal of improving the lives of millions of Latin Americans. I am grateful to our Chief Operating Officer Marcelo Claure for leading this initiative, in addition to his other responsibilities at SBG.”
“Growing up in Latin America I witnessed firsthand the creativity and passion of the people,” said Mr. Claure. “There is so much innovation and disruption taking place in the region, and I believe the business opportunities have never been stronger. 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.”
Rajeev Misra, Chief Executive Officer of SoftBank Investment Advisers, said, “Latin America presents significant opportunities for SoftBank Group, and the Vision Fund will have the ability to co-invest alongside the SoftBank Innovation Fund. Marcelo and team will offer invaluable expertise to help Latin American companies scale their operations, benefit from the greater SoftBank ecosystem and grow into global market leaders.”
The SoftBank Innovation Fund will invest throughout Latin America, including in Argentina, Brazil, Chile, Colombia and Mexico. Industries of particular focus for the Fund in the region include e-commerce, digital financial services, healthcare, mobility and insurance, among others.
The unique traits and rapid economic development of the Latin American market, coupled with the fact that it represents 10% of the world’s population and 8% of the world’s GDP (two times the GDP of India and half that of China), present significant growth opportunities for rapid technology deployment at scale and disruptive innovation. Examples include:
- Rapidly Growing Middle Class: Since 2000, over 50 million people in the region have entered the middle class, generating increased disposable income.
- Internet and Smartphone Penetration: A drastic increase in Internet and smartphone penetration has led to a digitization of daily life; Latin America’s more than 375 million Internet and 250 million smartphone users outpaces the United States.
- Consumer Behavior: A major shift in consumer behavior to a focus on online shopping; retail e-commerce sales have grown from $29.8 billion in 2015 to $54.0 billion in 2018.
- Digitalization of Financial Services: Banking activities are increasingly being handled online, but approximately 70% (400 million people) of Latin Americans remain unbanked or underbanked.
- Transportation Infrastructure: The region suffers from severely underdeveloped public transport; from 1992 through 2010, the region invested only 0.5% of GDP in transportation, compared to the global average of 1.6%.
- Dense Urban Areas: The region is highly urbanized, with 79% of the population living in urban areas, compared to 48% in China and 29% in India.
- Healthcare Solutions: Services are fragmented and incidences of non-communicable diseases are expected to rise; new cases of cancer per year and the number of people suffering from diabetes are expected to grow by 66% and 60%, respectively, from 2012 to 2030.
SBG believes these factors contribute to the creation of an attractive market for emerging technology companies and entrepreneurs, and the need for patient capital to support them on their journeys.
Photo courtesy of juanedc.