While many see Tencent’s potential acquisition of Supercell integral to the former’s plans for world domination in the video game industry, it is a win-win situation for SoftBank Group Corp too.
Having ownership of up to 73% stake in Supercell, SoftBank will be able to invest in more start-ups with increased liquidity after transferring those stakes to Tencent. In line with that, Masayoshi Son, the founder of SoftBank has decided to divert his attention to investing in start up, away from video game that was formerly a chief part of its business.
Photo Source: Unsplash
Softbank’s connection to the startup ecosystem began when it held a stake of ownership in Alibaba in 2000. It brings to the fore of our minds how patience is gold, when Alibaba paid out a staggering amount of US87 billion 14 years after Softbank’s initial investment in 2000.
As an attempt to repeat this glorious history, Nikesh Arora, who has recently resigned from Softbank spearheaded acquisitions of startups dwelling in the on-demand scene, with the likes of Snapdeal and OlaCab. The former is now the largest online marketplace in India and the latter, an “unicorn” start-up that provides on-demand transportation and ride-sharing services in more than 100 cities in India. In spite of Arora’s high-profile departure from SoftBank, the unwavering ambitions of the company to invest in promising start-up remain central.
Before this successful string of acquisitions of viable start-ups can continue, SoftBank knows that it has to cut debt amid mounting losses from Sprint and the $51 billion acquisition spree it went on previously. More capital needs to be raised, in the likely event of a potential acquisition thus warranting the plan SoftBank has in the pipeway to to raise minimally 7.9 billion in the sales of its shares in Alibaba. Furthermore, Gungho Online Entertainment, a game developer company under the wings of Softbank will be dropped in favour of of the shift in focus onto promising start-ups.
It is a matter of time before Masayoshi Son goes on another acquisition spree, bagging more start-ups while further bolstering its position as a formidable Internet giant.
Beyond Asia Pacific, Finnish on-demand home cleaning start-up Freska snapped up Wipe, its equivalent in Norway. Prior to this, the abrupt closure of US-backed Homejoy last year gave us the impression of a bleak future trajectory for house-cleaning start-ups. This verdict turned out to be a hasty one as the on-demand home-cleaning industry consolidates further.
Moreover, Amazon-backed Housejoy in India has been able to sustain their growth despite many casting doubt on the feasibility of home services following the failure of Homejoy. It has acquired on-demand laundry start-up MyWash, adding to its wide repertoire of at-home services like cleaning, plumbing, carpentry, painting and more. As Housejoy works alongside MyWash, the former is better positioned to provide quality laundry services in an expanding and highly untapped laundry market in India.
In Australia, the on-demand space is also seeing more acquisitions, with the latest being Zoom2u acquiring Sydney-based on-demand shipping start-up Fetchh. Where both of these on-demand logistics marketplaces share similarities, their company vision is one of them. Together, these two start-ups are passionate about further disrupting the logistics industry to provide faster, more efficient and reliable delivery service to consumers.
The world’s obsession with anything fast and convenient is fueling the demand for on-demand start-ups. Photo Source: Unsplash
As our appetite for quick fixes swells, on-demand start-ups are gaining more traction than before. Their rising popularity, owing to the instant gratification it provides, makes for a huge selling point when it comes to acquisitions. Amongst numerous on-demand verticals, last-mile delivery and transportation came out on top with DoorDash, Postmates; both delivery start-ups and Uber, a ride-hailing app taking the first three spots on Forbes’s Hottest On-Demand Startups of 2015.
Seeing the scalability of on-demand start-ups, especially with some of them bagging 6 spots on Forbes’ Hottest Startups List of 2015, investors are quick to throw in millions of dollars in their funding rounds. From the looks of it, could acquiring on-demand start-ups be the way to go in gaining an edge over one’s peers? There is some pretty good odds SoftBank would also ride on the on-demand wave as it moves to being startup-centric.
About: Carrie Er is a Marketing Communications Specialist at Arcadier, a SaaS company that powers next generation marketplace ideas. You can follow Arcadier on Twitter, Facebook, and LinkedIn for the latest insights on the Sharing Economy.