At the beginning of 2019, the Japanese corporate Softbank announced investments of 5 billion dollars in Latin America. Since then, Brazil has been the Latin American country most spoiled by corporate investors of the Japanese firm.

The Colombian startup Rappi was Softbank’s first significant investment in Latin America. However, Brazilian companies have received more attention since then. Investments in the South American country began with the digital bank Nubank, which is already a unicorn and has mushroomed in the region. Afterward, Creditas loan fintech received the support of the corporate for its expansion. The latest news indicates that Brazil will continue to be one of the favorite countries.

SOFTBANK PURCHASES AND BREEDS UNICORN IN BRAZIL

In September, Softbank gave the boost that the Brazilian apartment rental company QuintoAndar needed to become a unicorn. The firm financed the company with $ 250 million.  

At the end of September 2019, the Japanese technology giant announced that it would invest in 40 companies with high growth potential in Brazil. Softbank managing partner Andre Maciel revealed this news at an event held at the Cubo de Itaú Unibanco technology and innovation center. According to the executive, these 40 Brazilian companies fit Softbank’s investment plans. 

BRAZIL STILL HAS SPACE TO CREATE MORE UNICORNS

Andre Maciel, Softbank Executive

Investment opportunities for SoftBank go beyond technology. The Japanese firm is looking for companies that have found opportunities in health, logistics, transportation, and agribusiness, among other areas in Brazil.

INVESTMENT IN A “UBER” of Buses

On Monday, October 7, Softbank announced a new investment in Brazil. The conglomerate’s commitment is to the Brazilian urban mobility startup, Buser. 

The Japanese conglomerate invested with the participation of the Globo Group, according to a statement sent by SoftBank. In addition to SoftBank and Grupo Globo, the Canary Islands, Valor Capital, and Monashees funds also accompanied the investment. The amount was not disclosed. 

Buser connects passengers with charter companies for intercity and interstate travel. The startup will use part of the funds to invest around $ 300 million in the next 12 months, company president Marcelo Abritta said. 

“The road transport market in Brazil is multimillionaire, but it is still expensive and inefficient. For us, Buser can occupy a leading position in the segment ”, believes Paulo Passoni, an investment partner of SoftBank. The startup offers prices up to 60% lower than conventional ones.

A STARTUP IN EXPANSION, BUT QUESTIONED

Currently, Buser connects 50 Brazilian cities. The company plans to extend its services to 200 municipalities and 20 Brazilian states in the coming months. To achieve this, the startup will increase the number of employees five times: it has more than 100 vacancies, which should add to the current 26 people in the company. 

“On the technology side, we want to allow passengers to register on the bus with facial recognition, for example,” says Marcelo Abritta, co-founder and CEO of a startup. Other developments may include the installation of sensors in vehicles to identify, for example, if a passenger has fastened his seat belt.

For Luiz Alberto Albertin, professor at the Getulio Vargas Foundation (FGV-SP), the contribution is vital for Buser to gain scale and become a giant in the market. “This shared economy model is already consolidated, but it is no longer possible to operate it with little money. You need to get big in the fight, ”he says.

Softbank’s new investment must face a challenge to test its business model: regulation. This problem is an old acquaintance for Japanese investors, who bet on Uber when facing the same issues.

In Brazil, Buser faces friction with traditional Brazilian bus companies, in a similar way that Uber had problems with taxi drivers around the world. Buser has defended himself against the accusations by pointing out that it is a technology company that unites charter and passenger companies. 

The company has lawsuits in Brazilian states, such as São Paulo, Rio de Janeiro, and Santa Catarina. The case has reached the Supreme Federal Court, which rejected a court order to ban the service. The trial is on hold. Meanwhile, Buser can operate until the superior court of Brazil issues a resolution.

“It’s a sector that hasn’t changed in 70 years, but we’re convinced it’s great. We will comply with what justice defines, ”says Abritta.

Uncertainty does not discourage investors. “We have seen this model work in countries with a strong regulatory environment, such as France and Germany,” says Passoni.

For experts in Brazil, Buser’s case has a more straightforward solution than Uber, a company that had to wait for the new regulations to be legalized worldwide. “In the case of Buser, those who participate in the platform are charter companies that are already legal,” says Paulo Furquim de Azevedo, a business professor at Insper. “Also, the state has an incentive to have a favorable position for Buser, as it is a service that encourages the reduction of cars on the streets.”

Softbank WILL SUPPORT 50 Startups IN THE NEXT FIVE YEARS

Softbank has plans for Latin America in the medium term. Through the Latin America Tech Hub incubator, the Japanese corporate will support the ventures in Latin America.

Serial entrepreneur Ralf Wenzel will be in charge of this work, after being appointed as CEO of the Tech Hub. This hub will have the support of companies in the Softbank portfolio to expand its operations in Latin America. The objective is to create 50 enterprises in the next five years.

Wenzel founded three companies, including Foodpanda, one of the most successful delivery services in the world, with operations in 40 different countries. Wenzel’s ventures have been focused on emerging markets, with a particular interest in Southeast Asia, the Middle East, and Latin America.

Softbank Group International CEO Marcelo Claure said Wenzel has proven to have an excellent success record when creating companies from scratch and taking them to new countries. Wenzel also has experience developing products used by millions of people around the world. 

“LATIN AMERICA PRESENTS A POTENTIAL WITHOUT EXPLOITATION IN DIFFERENT SECTORS AT THE EDGE OF THE DISRUPTION.”

Ralf Wenzel, CEO of Latin America Tech Hub

URBAN MOBILITY, SOFTBANK FAVORITES

Urban mobility is one of the sectors preferred by Softbank. This sector produced excellent results with Uber and Didi Chuxing – a company that now owns the Brazilian startup 99. The delivery company Rappi and the logistics company, Loggi, are part of this trend.

Softbank has the opportunity to redress its reputation in Latin America. After the disaster that happened with WeWork, investors have questioned Softbank’s ability to bet on startups. According to some media, the Japanese corporate has had problems launching its Vision Fund 2.

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