SAO PAULO (Reuters) – SoftBank, including $5 billion to the Latin America fund is looking for regional start-ups with cash, it is also a court of local venture capital funds, in an unusual move for a Japanese investor, who has shaken the region’s tech scene.
FILE PHOTO: The logo of SoftBank Group, Corp, is displayed at SoftBank World in 2017 conference to be held in Tokyo, Japan, on July 20, 2017. (REUTERS photo/Issei Kato/File Photo
SoftBank is usually to put money directly into start-up businesses, but in Latin America, has been focusing on venture capital funds and, in a departure from the Japanese conglomerate’s global approach.
Venture capital is a relatively new company in the Latin America and the SoftBank investment will help to drive innovation, to foster, in particular, are in an advanced stage of tech-companies, SoftBank is the main goal.
But industry sources said Softbank’s venture capital cash comes with strings attached and that not all of the potential beneficiaries were very happy about it.
Sources familiar with the matter, according to SoftBank, the request for a right of first refusal if any of the companies, in particular venture capital funds in the portfolio were to decide to raise additional funds, or had to be put up for sale.
This would give SoftBank an advantage as a potential market-leading investor, the future fund raising rounds, and gives the consortium an edge over other investors in the fund, and a number of the sources have said.
These sources said that Softbank wants to take that position in any fund would be able to interfere with the other investors in the fund, which would also be pleased to have the opportunity to co-invest in it.
Two of the Brazilian venture capital funds, have rejected the proposals submitted by the shareholders, two sources with knowledge of the matter said.
SoftBank will also require venture capital firms to invest into it to accept a non-competition clause, and to give priority to a Japanese conglomerate, if they’re interested in is in an early stage of the start of the investment, the sources said.
The sources spoke to Reuters on condition of anonymity because the information is not open to the public.
Softbank declined to comment.
In the venture capital business is still small, in Latin America, with investment of a total of up to $2 billion in the previous year, even though it was four times the amount of 2016.
In Brazil, Latin America’s largest economy, and venture capital makes up only 0.04% of the GDP, while in the United States is 0.43%, while in China, 0.33%, according to a McKinsey & Company report.
In the first half of the year is 2019, and venture capital investments in the region totaled $2.6 billion, more than three times the $780 million) from a year earlier, according to The Association of Private sector Investment in Latin America. More than one-third of that from SoftBank’s $ 1 billion stake in a single firm, Columbian, delivery app in Rappi.
SoftBank has said that it intends to deploy nearly $500 million of the fund’s capital is its third-party venture capital funds, but has not disclosed how much it has invested in.
Reuters reported in September that SoftBank had been sealed offers are to invest in investment funds managed by at least two venture capital firms: a Brazilian firm, Valor Capital, and Argentina’s Kaszek Ventures, which recently announced it had raised $600 million in fresh capital.
The voices of Courage and Kaszek declined to comment.
Existing shareholders in venture-backed companies are often the result of successive funding rounds in start-up businesses, where the valuation may be increased with each round.
However, one of the sources said that it was considered as a best practice for both venture capital funds and other investors to lead the financing rounds to the other party to make an impact on the value of the sequential-financing of the activity.
The botched initial public offering of office rental company WeWork, which Softbank was invested, it emphasizes how the other investors will not agree with the strong $47 billion in rating, located in the WeWork is the most recent private funding round.
Columbia university Professor Donna Hitscherich to see the question as to the result of successive funding rounds, as “a natural question for an investor, or a venture capital fund, which aims to be a company that has been around since the beginning,” as a way to ensure that a solution.
Softbank has yet to be involved in a sequence of funding rounds in Latin American business, as it has just launched its dedicated fund for the region.
Slideshow (2 Images)
In Colombia, delivery, app, Rappi, the rating has increased from a financing round led by DST Global, in a Feb. By 2018, on the SoftBank-led, in the month of April.
IMAGE: SoftBank-growing Latin American startup in the portfolio, here
Report by Carolina Mandl and Tatiana Bautzer; Additional reporting by Sam Nussey, in Tokyo; Editing by Jane Merriman and Christian Plumb