With Nikesh Arora’s resignation as president of SoftBank, India’s startup ecosystem may have lost one of its biggest champions but it’s unlikely to hurt much. At least half a dozen industry executives ET spoke with said the impact of Arora’s exit was unlikely to be as drastic as it might have been had the decision been taken about a year ago, as the Tokyobased investor has slowed investments in the country and not made any fresh deals in the past eight-nine months. SoftBank, led by Arora, pushed India’s startup growth into high gear closing three back-to back investments worth nearly $1 billion (Rs 6,700 crore) during October-November 2014.
The money went into some of the country’s most high-profile companies India’s biggest taxi aggregator Ola; its secondlargest online marketplace Snapdeal; and a fast-growing and highly visible real estate website, Housing.com. SoftBank’s aggressive pace of investments made it, along with New York-based hedge fund Tiger Global, the biggest investor in Indian startups. Tiger Global, too, has slowed its pace of dealmaking in India.
“I don’t think that Nikesh stepping down will have any long-term impact on the Indian startup ecosystem because the market is compelling in its own right and (SoftBank CEO) Masayoshi Son has enough access without being reliant on any one person,” said Ashish Gupta, managing partner at Helion.
“The Indian exploration may go slower temporarily as the SoftBank effort will need a leader. They may find someone local who is on the ground and hence better equipped to dig deep,” he said. Arora’s abrupt decision, nonetheless, sent shockwaves across India’s startup ecosystem, with investors, entrepreneurs and even the founders of SoftBank’s portfolio companies here caught unawares. Especially as the announcement came a day after Arora was given a clean chit by SoftBank in allegations made by unnamed stakeholders.
SoftBank has invested nearly $2 billion across six Indian companies, the other three being mobile advertising network InMobi, grocery delivery startup Grofers and budget hotels aggregator OYO. Except InMobi, all the investments were made over the past 20 months after Arora came on board. SoftBank has announced plans to invest $10 billion in India.
For all this, several investors blame SoftBank and Arora for excesses in India, accusing it of pouring too much money into startups that were not ready for it. Some of SoftBank’s aggressive bets here were made without proper due diligence or monitoring and rather on gut feeling, they said, resulting in cases like Housing whose founder Rahul Yadav had to be fired for misconduct eight months after the investment. In an earlier interaction, Yadav told ET that “Nikesh bet on me.
I don’t think he even saw the Housing website before investing.” SoftBank said Arora would continue to support various investments as an adviser, but did not specify which companies he would work with.
Arora is not on the boards of any of SoftBank’s portfolio companies in India. Instead, SoftBank executives Jonathan Bullock (Snapdeal, Ola, Housing) and Deep Nishar (Grofers) are more actively involved in these companies.
“It’s the changing of a friendship (with the startup ecosystem) and there will be some anxiety but life goes on,” said Vani Kola, managing director at venture capital firm Kalaari Capital, which has co-invested with SoftBank in Snapdeal. “Nikesh… cares deeply about Indian startups. But the ecosystem is resilient and companies have to build their own business.”
Investors tracking India’s startup ecosystem expect to see some impact on SoftBank’s portfolio firms in the country when these firms set out to raise fresh capital in a challenging fund-raising environment, when companies typically count on existing investors. But portfolio companies are not worried for now. “SoftBank Chairman Son-san has already reached out expressing his support for Housing.com, and we look forward to a similar, direct relationship with him as we continue to transform the business,” said Jason Kothari, CEO of Housing.com.
October 2014: Joins Japan’s SoftBank Group as vice-chairman from Google, where he was chief business officer. Holds additional post of chief executive of SB Group US (previously known as SoftBank Internet and Media)
October 2014: Leads SoftBank’s $627-million investment in Snapdeal and $210-million funding in Ola; SoftBank says its India investments may cross $10 billion in a decade
November 2014: SoftBank leads $90-million funding round in real estate website Housing
April 2015: Quits the boards of Soft-Bank portfolio companies in India – Snapdeal, Ola and Housing May 2015: Is named representative director, president and COO of SoftBank Corp. SoftBank founder Masayoshi Son says Arora the “primary candidate” to succeed him as CEO
August 2015: Buys Soft-Bank stock worth $483 million using savings and debt, establishing his commitment to the company. Becomes SoftBank’s second-largest individual stockholder
January 2016: Unnamed investor group asks SoftBank board to investigate Arora and possibly dismiss him for questionable transactions and poor investment performance February 2016: SoftBank forms a special committee comprising independent board members to review the allegations against Arora
May 2016: Arora’s pay package for 2015-16 estimated at $73 million, making him one of the highest-paid corporate executives globally for the second year in a row June 2016: SoftBank-constituted panel concludes no merit in the allegations against Arora
June 2016: Arora steps down as President and COO of SoftBank Corp
For Nikesh Arora, joining Japan’s SoftBank Group in 2014 was the crowning moment of his storied career. The 48-year-old joined the Tokyoheadquartered telecom, internet and media giant from Google, where he was among the highest-compensated executives. SoftBank founder Masayoshi Son not only poached Arora from the Mountain View-based tech giant but a year later also declared that the Ghaziabad-born executive was his “primary candidate” to succeed him as CEO when he retired. Arora’s rise through the global corporate ranks has been dizzying.
The IIT-BHU graduate and Boston University alum, who arrived on US shores with just $200 in his pocket, joined Google in 2004 and led its European operations, rising to chief business officer. He married Delhi businesswoman Ayesha Thapar, daughter of Indian City Properties CEO Vikram Thapar, some months before joining SoftBank. A keen golfer, Arora, during his two-year stint at SoftBank, led the company’s global investment strategy, particularly in India, a country he continues to visit on a regular basis and where he started his career at Wipro. He is one of the highest-paid corporate executives globally.
But he also faced criticism from SoftBank investors for his investment decisions and an unnamed shareholder group even sought his ouster and called for an investigation. A committee constituted by SoftBank cleared Arora of the charges a day before his resignation was announced. Arizona Coyotes JerseyShare This