Softbank, World Bank to Spread Venture Capital to Developing Countries
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Softbank and the World Bank this week joined in an $500 million initiative with no lesser goal than to bring the developing world online.
The World Bank's International Finance Corp. (IFC) and Softbank will incubate Net companies in 100 developing countries, using the newly formed Softbank Emerging Markets (SBEM) as the vehicle for investment. IFC and Softbank will invest $200 million in the new company and divide control through a 25 percent and 75 percent respective holding, and IFC will join Softbank's Latin America and China Internet funds.
SBEM will offer financing and support services to the VC recipients, and will network the companies to local and global partners. The fund will target companies which locally adopt previously-established business models, similar to Softbank's import strategy in Europe and Asia, and will front risk capital for original concepts.
The new fund will be based in California, and intends to establish a Global Incubation Center to support technologies and concepts from developing world and bring the models to market. SBEM will seek out joint venture partners among established Net names to bring local rollout in developing countries. The joint ventures are seen as a means of positioning local partners to build, launch and operate the local replicas.
The project also aims to lift Internet penetration levels by wooing investors to the emerging regions, which SBEM expects to set off a domino effect that brings down access costs and increases the number of subscribers. The fund will also work towards free and subsidized access for schools, with the intention of promoting widespread education about the Internet.
"The digital divide is one of the greatest impediments to development, and it is growing exponentially," said World Bank President James D. Wolfensohn. "With this initiative by IFC and SOFTBANK, we are taking a lead in the effort to close the gap. This investment will accelerate the inclusion of the developing countries in the information revolution.
"It will transfer technology from the rich countries to the developing world, fostering sustainable new local businesses which will promote prosperity and reduce poverty. And it will, I hope, encourage others to follow with their own investments and initiatives to establish technology and information centers all around the world."
Softbank currently holds stakes in 300 Internet companies throughout the world.