SoftBank’s early India bets are beginning to deliver.
The Japanese investor, which clocked nearly 5.4x returns on Lenskart and chose to stay invested in Meesho ahead of its public listing, has so far returned close to $7 billion from India to its global investors.
And, another $3 billion is in liquid holding in the Indian public markets.
Sources confirmed that SoftBank’s investment in value ecommerce player Meesho is sitting at 2x.
The firm had invested first at a $2-billion valuation and made a follow-on investment at $3.75 billion.
After Meesho’s listing, the firm’s public holding will be close to $4 billion, said people in the know.
Despite these returns in India, SoftBank has not made any large new investment in the Indian startup ecosystem over the past two to three years.
However, it remains convinced that India’s technology story is still in its early innings.
When asked about the initial public offering (IPO) frenzy and the returns to early investors, Sarthak Misra (pictured), partner at SoftBank, said the recent IPO wave is less about exits and more about validating the maturity of founders, management teams, and the tech ecosystem at large.
“It is a big validation for the tech ecosystem.
"These are companies and management who have seen some set of companies going public before them.
"They have built their business, they have seen the tech winter as well as the funding frenzy… navigated some of that and built their businesses in a way that they now feel it is the right time to go public,” said Misra.
Why not exit, if the success of some IPOs is validation of the tech ecosystem? Misra said that it is not about choosing not to exit.
“We have a large public portfolio in India across multiple positions. We have so far returned from India close to $7 billion of capital historically to investors and have $3 billion which is liquid and will go up with Meesho.
"We always look at sending money home from time to time,” he added.
SoftBank has invested around $10.6 billion in India.
Its India portfolio currently has 20 companies, including 6 listed ones, like Meesho.
Among the early bets, the firm has exited PB Fintech, Paytm and Zomato.
While IPOs are being celebrated as a marker of progress, Misra admits that it has not led to many new investments in India recently.
“We have doubled down selectively on existing portfolio companies where we saw strong opportunity, adding capital to firms such as Meesho, Whatfix, Juspay, and Eruditus,” he said.
On new opportunities, Misra said the right mix of growth visibility and attractive valuations has been hard to find, with a broader reset in private markets still playing out.
“The other thing that we need to acknowledge is that artificial intelligence (AI) is a very big global theme, and SoftBank is keen to invest in these AI companies.
"We are in the early innings, and hence, as these AI opportunities come, we are clearly tracking them across companies.
"We are keenly tracking them across companies using AI to improve their existing businesses, and AI-first businesses. We would love to partner with them,” added Misra.
The firm believes AI has fundamentally brought down the cost of knowledge work and software development, which should lead to an explosion of demand across sectors.
Companies that enable and monetise this demand is an area SoftBank sees the next generation of opportunities emerging, said Misra.
“AI-driven content creation, particularly in entertainment, has already shown strong traction over the past year. We are observing such companies,” he added.
On concerns about the actual investment flows in the AI startup ecosystem in India, Misra believes it is largely a timing issue.
He said, “Founders are acutely aware of the spending power of Indian consumers and enterprises, and AI solutions will have to be priced accordingly.
"There is little appetite for deploying AI purely for novelty; it must solve real problems at a viable cost.”
He added that while conversations are still at an early stage, SoftBank expects more tangible AI investments to materialise over the next 12-18 months.
Misra also rejects the suggestion that AI is a bubble, calling it one of the most transformational technologies of this generation.
“The India team continues to evaluate opportunities actively and remains committed to the market,” he said.
He agrees that the challenge with AI is a bit like crystal gazing.
“I think in India it’s a design problem and a product problem and that needs to be solved.
"The Indian entrepreneurs and we are all trying to figure out what is going to be that design solution or product solution that allows us to make the most use of AI as technology,” he added.
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