The logo of the SoftBank group in Tokyo.
Philip Fong | AFP via Getty Images
LONDON – SoftBank wants to put its money on diversity.
SoftBank Investment Advisers, which manages the Vision Fund of the Japanese technology investment conglomerate, announced on Wednesday that it will launch its diversity-focused Emerge Accelerator program in Europe.
The company first launched Emerge in the US last year with WeWork Labs, the office rental company’s start-up incubator, to support 14 startups whose founders come from under-represented backgrounds. SoftBank has so far invested US $ 5 million in 13 start-ups in the program.
Now SoftBank is bringing Emerge to Europe – but with a twist. This time it brings in Speedinvest and a number of other well-known venture capital investors on the continent for access to a wider network of potential investors and partners.
“Softbank is a famous later-stage investor with massive global success,” said Oliver Holle, co-founder and managing partner of Speedinvest, in an interview with CNBC. “But they are not designed to invest in these very early stages of business development.”
Other venture funds participating in the European program are Breega, Cherry Ventures, firstminute capital and Kindred.
Start-up accelerator programs are a common way for entrepreneurs to get access to mentoring in the early days of building their business. Many well-known technology companies have applied for accelerator programs today and started successful businesses, including Stripe, Airbnb, and Coinbase.
Catherine Lenson, Managing Partner and Chief Human Resources Officer at SoftBank Investment Adivsers.
Two key differences between traditional accelerator programs and SoftBanks are that the latter not only focuses on black-background founders and other minorities, but also invests in companies.
“It has grown from an accelerator of connections, tools, networks and opportunities to an accelerator that ends up funding businesses,” Catherine Lenson, managing partner and chief human resources officer at SoftBank Investment Advisers, told CNBC.
Last year, the assassination of George Floyd and the ensuing Black Lives Matter protests against police brutality and racism sparked boardroom discussions about how companies should deal with diversity. The tech industry has gotten a bad rap for diversity, with predominantly white and male people working in the industry.
Various technology investors – including SoftBank and Andreessen Horowitz – have developed initiatives to solve the problem. Some firms, like London-based Ada Ventures, have promoted new venture capital standards that put diversity at the forefront of investment decisions.
In Europe, according to a report by Atomico, around 91% of venture capital went to start-ups with all-male founding teams last year. And 62% of underrepresented founders found it more difficult to raise cash, up from 31% in 2019.
“We see founders from all backgrounds have gone through incredible incubators very early in their lives,” said Lenson. But “when they came to later funding rounds, we found that the doors were still closing for them,” she added.
SoftBank’s eight-week Emerge program is open to a cohort of companies in the seed phase who already have a viable product with the potential to scale, and at least one founder who identifies as ignorant, female, LGBTQ +, disabled, or a refugee.
Investors would then support the seed rounds of successful startups, with SoftBank injecting up to $ 2.5 million and Speedinvest doubling that amount, Holle said. The other venture capital firms would participate with smaller commitments.
Due to the coronavirus pandemic, SoftBank was unable to personally run its 2020 program as originally planned. Lenson said the same would apply this year, but hopes there could be a personal component if travel restrictions ease in the coming months.
Emerge isn’t SoftBank’s first diversity-focused investment initiative. For example, the company has also created a $ 100 million opportunity fund for minority companies. However, SoftBank doesn’t have the best track record of supporting diverse teams as it has only invested in a handful of companies started by black or female founders.