MC Interview: 'We’re competing with IPOs now': SoftBank’s Sumer Juneja says startup listings are rewriting India’s funding game

Over the last 18 months, the deal flow has been improving quite a bit on AI first companies.

I'll divide AI into three buckets. One will be AI companies which are building for the world. They might have started off in India but the founders are moving to the US.

Then you have AI first consumer companies in India which are now gaining traction and getting to scale. At least where we're seeing 20 to 30 million dollars of recurring revenue or there's some product market fit which we are seeing in the market.

The third bit is that we've looked at more companies either in the traditional sectors or how they're getting disrupted.B2B enterprises for example.

So those are the kind of themes which we will lay out. And in addition, there's infrastructure.

 You had also said that you won’t do anything below $50 million, because that won’t move the needle for you. Does that still hold true? 

Similar, but look, I think the good thing about SoftBank is the flexibility, right? So if you do see an opportunity where you're not getting $50 million, you're getting slightly less, I don't think we're going to say no.

India's done well for us. You've seen all the IPOs. We want to continue investing in India. We don't want to be out of the game for sure.

Now, if that means we have to do deals which are $25 million, we'll do it. If it means we have to do $20 million, we'll do it. But we are not going to stay out of the market.

Can we expect this to happen, through 2026 when SoftBank will start becoming more active again in India? Because in the last three years,  you've been more active on the exit/IPO side of the equation.

You know, people say, oh, SoftBank is on exit mode. Now, going IPO is not an exit mode.

That's a company's decision, the Board's decision. We have sold very little in these IPOs.

But you did sell after Paytm, Zomato and PB Fintech went public...

Exit depends on where we think what the incremental returns we think are from here on.

The upside…?

Not only the upside, also the incremental internal rate of return (IRR) which we want to get from here.

We never think that SoftBank needs capital and, therefore, let's start selling the stock, right? It's not like we've ever gone and dumped the stock in a hurry or in a panic.

You often say that you are looking for the next Harsha, Vidit and Peyush. Do you think there's a paucity of that cadence of entrepreneurs?

I don't think there's a paucity of quality.

There was no funding for 2022, 2023, right? And so I think maybe the company's scaling got affected.

Over the last 12 months, the pipeline is becoming more and more robust. But the entrepreneurs we're meeting now are high quality.

I also think that when you go through 2022, 2023, what did all the VCs and board members tell their companies? Profitability is important. Be very efficient.

Companies are being very judicious of how much they want to raise. It’s also good for investors because dilution can be a silent killer.

Also, if you meet a lot of these entrepreneurs, given this whole huge flow of IPOs, they are all talking about IPO. So you meet an entrepreneur where he would have said, “Oh, you know what? I am going to raise a $500 million round.”

He is like, I don't even want to do that anymore. I want to go IPO because all my peers have gone IPO.

Is that a good thing or a bad thing? Startups going IPO within five to six years?

When we started investing in India aggressively in 2017, 2018, there was no company which had done an IPO. But now,  let's say I have a choice of raising $300 million or should I raise $100 million via an IPO? And I think today we are competing actually against the IPO market as well.

 Do founders find it easier to cope with the public markets compared to private market investors? 

I think that they will learn with time.

It's maybe not great for us because we are competing, but for the ecosystem, it's phenomenal. Because the best thing you can do to any ecosystem is to give it more capital, right?

In 2026, tell us about your investment plans for India.  Will you become more active?

Yes, we will. Will we be doing deals? We have a good pipeline. We're confident that we will deploy capital.

A segment that investors seem to be very gung-ho about is vertical quick commerce. Fashion in 10 minutes, baby care in 10 minutes, househelps in 10 minutes. Is that something that you will look at? 

I don't have a view on things like, is vertical e-commerce good? Is there space for it? Because I do think that if something clicks, right, it completely becomes unexpected. So we always at least go with an open mind.

How do you see the quick commerce market evolving? The fight is set to intensify between Blinkit, Instamart, Zepto, with Flipkart and Amazon joining the party. Do you think there will be consolidation next year? 

In India, consolidation ever happens.  It will take capital, it will take an immense amount of execution and that has to play out.  Look at it this way - is there space for five grocery chains in India? Sure. But the value will accrue to the top two.

Will you look at doing investments in public markets? For instance, Prosus invested in ixigo and Elevation has launched a fund for late stage investing. 

No, we won’t do PIPEs. (private investment in public equities).