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No amount of money can be massive enough when one talks about investment in innovation and technology. And one of the world’s most deep-pocketed venture capital funds, the Japan- based SoftBank, has only raised the bar by announcing its commitment (amounting to USD 93 billion, with a target to reach USD 100 billion) towards the all-new Vision Fund which is touted as the biggest fund of its kind in the world.
What Vision Fund? – A corpus that will invest in ‘transformative technologies and disruptive entrepreneurs.’
So, is it welcome news for all aspiring entrepreneurs who of late have been wary of shrinking investments and sliding valuations of many startups? The answer to this is a clear ‘Yes,’ for SoftBank is notoriously famous for its bold bets in tech startups, including Ola, Housing.com, Hike messenger. The idea generating minds can hope for a financial backing with the coming up of this Vision Fund; hence, at least for now, the startup ecosystem still holds its promise.
It is to be noted that Saudi Arabia through its public investment fund, the Foxconn Group, and many others have joined forces to make this Vision Fund a reality. Stakes are high, more so, at a time when valuations have significantly come down (Snapdeal has been nearly stripped of its unicorn status in the latest negotiations), but no one seems to be willing to miss this so-called 21st-century industrial revolution.
Is It a Bubble in the making?
No analyst or prophet can precisely predict what the future holds for the startup l andscape, which has seen youths dropping out of colleges and turning down lucrative job assignments for the sake of making their idea a reality.
Why then term the SoftBank’s Vision Fund a bubble in the making or for that matter compare it with the late 1990s dot-com crisis? When Europe, especially the UK, invested heavily in machinery during the 17th-century industrial revolution to raise factory output, their contemporaries were still seeing agriculture as the primary sector for economic growth; today it is the West that outweighs almost all other regions regarding per capita income and st andard of living.
But the question is how much technological innovation does the world need? Can e-commerce completely replace the hitherto methods of carrying out the trade, will social networking over the internet put an end to social gatherings at homes and restaurants? In one view, technology can only be an enabler, not a substitute to any other sector of the economy.
Pouring so much wealth (given the fact that in the last five years a total of not more than USD 106 billion has been invested in tech startups across Asia)in technology can thus make sense only when it can make the global economy more organized, resourceful and productive.
The Road Ahead for Entrepreneurs
Had it been a period of stagnation, depression for the startup ecosystem, SoftBank would never have come up with such a colossal bet. Investment decisions, as radical as this, aren’t made out of blind speculations; they are backed by rationales, positive forecasts.
With the goal of investing USD 100 billion in tech companies, SoftBank will pick candidates from emerging economies; hence those with the idea that can revolutionize the way how contemporary markets function can feel enthused for their project can well be funded. This time, however, the VC’s focus will be more on fundamentals; sustainability and viability will outshine the gross number of subscribers or transactions.
It can thus be supposed that this Vision Fund is a bonanza, at least for aspiring entrepreneurs who are committed to rewriting the present scene rather than being a part of the me-too rat race; caution, however, has to be exercised by the VC Fund in selecting those projects that promise a real impact, while dumping those that are only short-term sensations.
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