Below are excerpts of a CNBC Interview with CNBC's Arjun Kharpal and Rajeev Misra, CEO, Softbank Vision Fund from Mobile World Congress 2018.
AK: What themes are you looking at investment wise?
RM: We don't look at themes per se, except that we have big investments in ride-sharing and e-commerce but our focus is on investing in companies that are disrupting and bringing efficiencies to different industries.
Whether its healthcare, whether it's finance, whether it's Lemonade with disrupting insurance, whether its Compass disrupting mortgages, home sales through your real-estate broker, Katerra which is disrupting construction, Auto1 where anybody in any size location, small town, big town can sell their used cars to 40k used car dealers across Europe.
Whether it's Oyo Rooms in India, standardising and putting on a platform one star, two star small hotels, so the examples go into every industry you can think of from financial services, healthcare, transportation, home construction, office space with wework.
AK: Within those categories you've often invested in competitors, how do you view those conflicts or how do you look at that investment philosophy when you're looking at many different companies but within the same sector?
RM: We usually don't, we usually invest in the number one company, we invested in Uber, not Lyft. We invested in Didi, which is number one, Ola which we believe is number one in India, Grab which we believe is number one in South East Asia. We subsequently invested in Uber which has some overlap but normally we do not invest in competing companies.
AK: Let's talk about Uber quickly, what are you telling the new CEO?
RM: We're telling him nothing, he is doing an amazing job. We're very happy with Dara, we're happy with the Waymo settlement, we are extremely happy with him recruiting his next bench of management, the progress he's making with regulators. We don't need to do anything with Dara. He's running a great operation for us.
AK: You've said Uber should focus on core markets, what did you mean by that and what does it mean for the business going forward?
RM: Uber is a global company, present everywhere but China. Middle-East, US, Canada, Asia and they'll remain a global company. One Uber app you can use to get an Uber car anywhere.
If there's some fine-tuning in certain regions where they decide to co-operate, that'll happen over time. I believe the future of Uber is not just transportation, but also food delivery, also insurance, car leasing, all kinds of ancillary businesses globally. That's what a platform should do. To have access to your consumers anywhere in the world. But there's so much growth left in these countries. If you look at the US, 15 to 20% of the population has ever used a ride-sharing app, Uber, Lyft all put together. So there's so much inherent growth in those economies, Europe, US for ride-sharing that they don't have to, and they are market dominant, in Europe, US and Latin America, Australia, they just have to kind of stay on course.
AK: Public in 2019, something you're backing?
RM: Of course.
AK: On track for that?
RM: Of course.
AK: You've already invested in 30 companies, is that pace going to continue?
RM: We started the fund a year ago, less than a year ago. We started recruiting in January, February last year, closed the fund, first close in May. We have hired 150 plus people across three locations, Tokyo, San Carlos, London, that takes a lot of time to hire front office, back office, compliance, portfolio managers down to analysts. That was the principle focus.
We do get every call for any company raising significant capital, we get the first call. Not because we have the capital, there's enough capital in this world. Because we have the ecosystem now, and the ecosystem has an exponential effect because what do we offer our portfolio companies? We can take them global. We can connect them to other companies that they can cross-sell. And Auto1 can sell used cars through Uber or through WeWork. WeWork can co-operate with Uber, etcetera, etcetera. That's our appeal. Our appeal is also we are patient, long-term investors, we are not, we are very very supportive of our entrepreneurs. We give them a lot of strength and confidence to pursue their hypergrowth. And need for capital any time over the next five years.
AK: And how many companies do you expect to invest in over the life of this fund?
RM: 70 to 100 companies.
AK: SoftBank's Vision Fund has often got its criticism perhaps from some of the VC industry that it distorts valuations, that it makes companies stay private for longer as well. How do you respond to some of those comments?
RM: The VC community benefits from the vision fund because we not only make primary investments into the company, we also buy secondary in all of our investments, from the VC community who want to exit. So the exit is there, whether it's an IPO or actually an IPO might not be a perfect exit because it won't have the liquidity for a VC to exit. We provide liquidity for a lot of VCs to exit, whether it was in WeWork, whether it's in Katerra, or Compass, or what have you. So we are extremely symbiotic with the VC community. We work closely with the VCs because the stage we invest is a very different growth stage, hyper growth stage, much later, 3, 4 years after the company has done its first round of financing. And a lot of the VCs, including Uber exited at 100 times their investment amount when we came in.
AK: Just a final one. There's been some talk about the SoftBank Group planning to IPO its mobile unit in order to fund some more money into tech investments into the Vision Fund. Where are we in that process?
RM: Early days, we haven't finalised yet what our plans are with this mobile unit. We are considering it seriously, but we haven't finalized any plans.