TOKYO: SoftBank Group Corp is lining up startup investments in Japan, aggressively pursuing entrepreneurs in its home market for the first time since the launch of its Vision Fund.

       The Japanese startup scene is going through a revival, helped by an influx of young talent from private equity funds and consulting firms, said Kentaro Matsui, a managing partner at the Vision Fund who overseas Japan investments.

       Combined with a shift in strategy to invest smaller sums than its previous threshold of US$100mil (RM436mil), this has meant more opportunities for the world’s largest tech fund to invest at home, he said.

       Japan’s weight in SoftBank’s overall portfolio will “definitely” increase, Matsui said in an interview in Tokyo.

       “The calibre of people in the companies we are investing in is clearly different” compared with 2018 or 2019, he said.

       “They’re way more sophisticated now.”

       Matsui’s remarks highlight SoftBank’s ambition to boost investments at home even as tech valuations abroad tank, hurting its earnings.

       The company next month may report its biggest-ever quarterly loss on the plunging value of its most valuable holdings, including South Korea’s Coupang Inc and China’s Didi Global Inc, estimated Kirk Boodry, an analyst at Redex Research who publishes on SmartKarma.

       Its newfound interest comes after years of criticism in Japan of an unprecedented investment spree that’s bankrolled some of the world’s highest-profile startups from Alibaba and Uber to Didi – while all but omitting its own backyard.

       SoftBank said on Tuesday it would back AI Medical Service Inc, a Tokyo startup specialising in endoscopy, in the Vision Fund’s third deal in Japan.

       This comes on the heels of investments late last year in Aculys Pharma LLC, which has the rights to develop and sell pitolisant for treating narcolepsy and sleep apnea in Europe, and Soda Inc, a startup that operates an online marketplace for sneakers and streetwear.

       While looking across all industries, medical technology, software-as-a-service and robotics are among the key areas of interest for SoftBank, Matsui said.

       A fourth investment in Japan would be announced soon, he added, declining to elaborate. SoftBank has recently expanded its team dedicated to investing in Japan to six members – four Japanese and two South Korean, including Matsui.

       AI Medical’s potential to expand globally was a key reason behind SoftBank’s decision to finance the startup, he said.

       AI Medical uses artificial intelligence to diagnose gastrointestinal diseases and plans to enter the Singapore market in the near future, while also preparing a US launch.

       “There are more startups that are extremely interesting,” in Japan, said Matsui.

       “We have a lot of potential investments in the pipeline.”

       Meanwhile, SoftBank Group Corp and its subsidiary Arm Ltd are closing in on an agreement to regain control of the chipmaker’s China operations and oust its rogue chief executive officer, according to sources.

       Arm China’s board, which consists of representatives from SoftBank, Arm and Chinese investors, fired Allen Wu in 2020 for alleged conflicts of interest, but he has refused to leave.

       He has had physical possession of the company’s official seal and registration documents, allowing him to ignore directors and continue to run day-to-day operations.

       Now the board, with support from authorities in China, is in the process of filing paperwork to have a new representative of the joint venture listed on an official government database and will get a new company stamp issued within days, said the sources.

       The CEO job is then likely to be split between two people.

       The resolution is not finalised and could still change, the sources said, adding that the companies have made progress on discussions with Wu repeatedly over the past two years only to have talks stall.

       SoftBank declined to comment. Representatives for Arm and Wu didn’t immediately provide comment.

       Wu’s enduring control has created thorny problems for SoftBank and founder Masayoshi Son during an already-tumultuous time.

       A recent deal to sell Arm to Nvidia Corp fell apart under regulatory scrutiny, and SoftBank is now looking to float shares of the business in an initial public offering (IPO).

       China is the largest market for semiconductors and a crucial part of Arm’s business as a provider of fundamental technology to the chip industry. Resolving control of the entity that distributes its products there would help remove one of the key uncertainties as SoftBank prepares for the Arm IPO. — Bloomberg