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Softbank's investment success prompts rivals to invest in startups

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(Credit: Reuters) Two men walk past a SoftBank Corp branch in Tokyo.Softbank
March 19
9:03 AM 2014

The success of SoftBank Corp, fueled in part by the huge gains it has made on investments, have prompted competitors like KDDI Corp, NTT Docomo as well as other firms like Sony Corp and Nissan Motor to set aside funds for venture capital investments, Bloomberg reported.

Since the business was established by Masayoshi Son in 1981, its market value has risen to $99 billion because of the returns of the investments it had made in firms like China-based e-commerce firm Alibaba Group Holding.  Because the billionaire's wireless carrier now holds stakes in around 1,300 technology businesses, it is more valuable than its competitors like NTT Docomo Inc and KDDI Corp even if they surpass SoftBank in terms of the number of subscribers. SoftBank initially invested $20 million Alibaba.com fourteen years ago and now SoftBank has a 37% stake in the e-commerce firm that is readying for an IPO in the US, the report said.  

Bloomberg data showed that Alibaba is now worth $153 billion. With this value, SoftBank's stake would be valued over $56 billion which represents 2,800 times what it originally invested in the company, the report said.

SMBC Nikko Securities Inc Analyst Satoru Kikuchi told Bloomberg News, "Son's success has provoked Docomo and KDDI. They are probably finding it hard to keep up with his moves."

In the midst of the saturation experienced in the wireless market in Japan, Docomo and KDDI are now eyeing startups to pave the way for an innovation revival and growth. In January, the venture arm of Docomo beefed up its investment funds to JPY 35 billion or $345 million, representing an increase of 40%. It established a JPY 10 billion fund in 2013 and bought an investment unit from its parent firm that had a JPY 15 billion venture fund. KDDI, on the other hand, is mulling on creating a new fund after pouring 60% of its venture fund worth JPY 5 billion on 19 startups, the report said. 

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