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SoftBank’s allocation of half its $100bn investment fund spells bad news for UK tech

Donald Trump

Members of the UK tech community have spoken out following reports that SoftBank will invest half of its $100bn London-based fund in US technology startups.

The news first surfaced on Bloomberg and seemed to be confirmed by a tweet sent from US President-elect Donald Trump’s official account.

Announced earlier this year, SoftBank’s fund was largely welcomed as positive news for the UK and European technology industries, but it’s now known that $50bn will be deployed in US tech with hopes of creating 50,000 new jobs for the country’s economy.

Dylan Bourguignon, CEO and founder of so-sure, a London-based startup seeking to disrupt the insurance market, commented on the news: “The UK and Europe has great tech talent along with disruptive and innovative ideas. I therefore hope that the other $50bn will be invested in our startup ecosystem.”

The entrepreneur spoke about the need to ensure that more funds are invested in the Seed stage across Europe and how this could, eventually, help to strengthen the sector. It would also make, he added, European stock exchanges more attractive for companies to float in than their US counterparts.

A triumph for Trump

Robert Bownes, director of communications at data science and intelligence marketing company Profusion, agreed that the SoftBank’s decision could spell bad news for the UK’s tech sector.

“The $50bn Softbank is investing in the US economy is a coup for Trump and a significant boost to the US tech industry. Softbank’s investment is staggering, especially considering that VC firms in total, in the US, had $163bn available to invest in June this year. By and large, this could be bad news for the UK tech industry,” he said.

Additionally, Bownes went on to note the fact that UK’s tech scene had long had to play catch up with its US equivalent.

“Simply put, UK tech cannot currently compete with a $50bn US tech behemoth,” he added.

SoftBank in the UK

SoftBank made headlines earlier this year when it announced its acquisition of Cambridge-based ARM Holdings. The deal, which closed in July, saw the Japanese telecommunications giant pay  £24bn for the company.

With this in mind, Bownes said it would be interesting to see just how much of the $50bn commitment is actually spent on young US-based businesses:

“Although Softbank’s CEO Mr Son has announced he plans to invest in US startups, there is a question of how much of the $50bn investment will go towards startups, given Mr Son’s history of large, high profile acquisitions such as ARM.”

Bownes also showed concern about the effects that additional jobs for the US tech industry could mean for UK tech talent, already under threat following the results of the Brexit referendum, adding that it could result in potential “brain drain”.

SoftBank also invested alongside Google Ventures Europe in Yieldify’s £7.3m round, announced in June 2105.