Clavel took over his new role at the Japanese conglomerate a year ago, jointly leading its investing vehicle SoftBank Vision Fund ( SVF) with Rajeev Misra. While Clavel spearheads SVF-II, Misra who stepped away from day-to-day operations in 2022 and later launched One Investment Management, oversees legacy investments from SVF-I. Clavel’s ascension coincided with a tightening of the ship at the Masayoshi Son-founded group after years of exuberance, amid a broader reset in the technology investing world.
Plenty of opportunities in India that excite us
“In the early days, there was some concern about the thin capital markets here. While we were excited about the opportunities, we questioned whether the IPO market would be large enough to provide liquidity for our exits,” said Clavel. “Fortunately, the capital markets in India have developed well, as progressive market regulations have stimulated capital flows and increased domestic liquidity, reducing our dependence on foreign markets like Hong Kong or the US.”
SoftBank portfolio firms FirstCry, Ola Electric and Unicommerce have gone public this year, and a $1.25-billion initial public offering (IPO) by Swiggy is lined up for November.
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According to Prime Database, which curates data on the domestic capital markets, 64 companies collectively raised Rs 92,645 crore through IPOs so far in 2024, making it the second-highest fundraising year after 2021.
The buoyant public markets have also meant many companies want to skip raising late-stage capital, which Clavel said was evident in India. “Founders may prefer to go public instead of taking large private investments just before an IPO. This is understandable—when IPO markets are strong, founders might opt for the public route to avoid the time and dilution of private rounds. But there are still plenty of entrepreneurial opportunities in India that excite us,” he said.
By contrast, the US public markets have been relatively stagnant for the past three years, he said. “There was a prevailing hope in the market that Arm’s IPO over a year ago would open the floodgates, but that hasn’t happened,” said the SoftBank executive.
The UK-based Arm Holdings, a chip design company where SoftBank holds a 90% stake, debuted on Nasdaq as the biggest IPO of 2023, raising $4.87 billion.
“The US market has been affected by election-related jitters, heightened interest rates and geopolitical uncertainties…After the excitement of 2021, there’s often a cooling-off period, and that’s what we’re seeing now,” said Clavel.
He pointed out, “We have been the largest foreign investor in the Indian digital economy for the last decade, and have invested $11 billion across Vision Fund-I and II. If you include SoftBank’s partnership capital, the total rises to $14 billion,” he said.
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In all, SoftBank has snagged cash returns of $7.5 billion from Flipkart’s sale to Walmart in 2018, and public market sales in Paytm, Policybazaar and Grofers (now Blinkit), where the investor made a complete exit.
However, Clavel said these exits in India were not due to any pressure to bring in liquidity, considering the stress on the Vision Fund, which had been clocking huge losses due to failed bets on high-flying startups such as WeWork. “There’s no pressure from SoftBank to push companies to go public in India…. If they are doing well and go public, we determine the best course of action for returns. There’s no top-down directive from us as investors,” he said.
“We believe we’ve backed the right founders in the right sectors, and our investments have been successful due to India’s stable government and supportive market environment,” said the co-CEO.
IPO-bound Swiggy, for instance, has hit $28 billion in market cap, achieving leadership position in both food delivery and quick commerce through Blinkit. “Food delivery and quick commerce are huge markets… Harsha (Swiggy founder Sriharsha Majety) and Swiggy approach the businesses with an innovator and builder mindset, and we are optimistic about the company’s execution capabilities in the longer term,” he said.
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AI investments
Softbank Vision Fund, which has deployed $160 billion globally across two editions, is looking at artificial intelligence (AI) infrastructure and data centres in India, following the euphoria around AI that has kept risk investors busy over the past two years.
“AI in India could develop along these lines, building on the existing digital and tech infrastructure,” Clavel said.
SoftBank will plough $500 million into Sam Altman’s OpenAI, valuing the maker of ChatGPT at $150 billion, Clavel confirmed to ET.
”We have invested in OpenAI and a set of other companies… Some may appear to be competitors, but in tech investing, it’s common to have multiple investments that might overlap in some way. We remain excited about the entire AI stack,” Clavel said, when asked about investments in Open AI, search startup Perplexity AI and others.
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Vision reset
What started off in 2017 as a $100-billion gargantuan fund, looks very different under the 49-year-old co-CEO, who has been at SoftBank for nearly a decade. Clavel, who joined after a 20-year stint as an investment banker at Morgan Stanley, admitted a lot has changed at the group.
“Vision Fund I had large limited partners from the Middle East and other regions, while Vision Fund II was entirely funded by SoftBank. In 2016 and 2017, when the Vision Fund was being conceptualised, we were writing large cheques. Today, we cut smaller cheques and have a flexible mandate,” he told ET.
SoftBank is finalising a $30-million investment in Ultrahuman, a wearables startup, among its smallest cheques, reflective of its new strategy. However, Clavel said capital was not a constraint, having pumped big monies into OpenAI and led a $1-billion round in British self-driving car Wayve.
Handed the job to clean up troubled investments from the Vision Fund, the executive has risen up the ranks in SoftBank over the last few years. “Rather than bringing in mega deals or raising funds from investors as his predecessors did, Clavel won Son’s trust as a steady hand, managing and fixing SoftBank’s complex or troubled transactions,” Reuters wrote in a profile published in January.
“We look at a broad range of sectors that are tech-heavy or closely linked to tech, and invest in companies that might be at an early stage or closer to IPO. So, if you look back and say, ‘Oh, SoftBank did more of this at that time,’ it’s not prescriptive. We have a flexible mandate,” Clavel said.
Clavel said the country’s long-term potential remains robust. “We have a significant portfolio in China, including major companies like ByteDance. Despite the recent challenges, I believe in China’s long-term potential. I’ve lived there and studied the language since 1993, so my view on China is the same as my view on New York City—never count it out,” he said.
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“The country has a history of value creation and building successful tech ecosystems, and we remain supportive of our portfolio companies,” Clavel said. While some capital from China may be potentially moved to India, the quantum is relatively small, he added.
“Bankers have mentioned this shift, but even if China’s IPO volume has dropped, the capital doesn’t necessarily move directly to India. The underlying growth and consumer dynamics in India are similar to what we saw in China a decade ago, which is encouraging for the market,” he said.