SoftBank's Advantage in the AI Race

SoftBank Group, the Japanese technology investor, believes that its $183.6 billion portfolio provides it with a unique advantage in the race for artificial intelligence (AI) dominance. According to Navneet Govil, the chief financial officer of SoftBank’s Vision Fund, the company’s large platform allows it to leverage its portfolio to build an ecosystem of firms that can effectively utilize AI technologies such as generative AI and large language models (LLMs).

Govil explained in an interview with Reuters that SoftBank is able to facilitate synergies between its 477 portfolio companies, which would be difficult for smaller platforms to achieve. He emphasized that the Vision Fund is not currently making investment decisions solely based on the potential AI tie-ins, but it does measure revenue generated by introducing its portfolio companies to one another as customers, suppliers, and potential expansion opportunities, particularly in Japan.

Highlighting the global reach of SoftBank’s Vision Fund, Govil mentioned that the fund has brought 50 of its portfolio companies to Japan, which would not have been possible if these companies were acting independently. This demonstrates the scale of SoftBank’s influence in the AI space and its commitment to building a robust ecosystem.

However, it’s important to note that SoftBank has scaled back its investments in recent years due to plummeting tech valuations and record investment losses in 2022. The company has adopted stricter criteria and has invested approximately $4 billion per year, compared to around $20 billion in previous years. Nevertheless, Govil believes that this investment amount is still significant compared to other funds investing in technology startups.

SoftBank’s ambitious vision of creating an AI ecosystem through its extensive portfolio is an interesting development in the AI space. The company’s ability to leverage its large platform and facilitate synergies between its portfolio companies sets it apart from its competitors. While the ultimate success of this strategy remains to be seen, SoftBank’s forward-thinking approach demonstrates its commitment to staying at the forefront of the AI revolution.

Quoting Govil, “Because of the size of our platform, we’re able to bring those companies to see how they can utilise generative AI or LLMs (large language models)… When you have 477 portfolio companies you can facilitate synergies, which isn’t possible if you’re a smaller platform.”