In India, SoftBank Tries, Tries Again

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SoftBank’s Vision Fund is investing $2.5 billion in the online retailer Flipkart.

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Kainaz Amaria for The New York Times

SoftBank’s Indian shopping spree is venture capital with a kick.

The Japanese conglomerate’s Vision Fund is investing $2.5 billion in the online retailer Flipkart, effectively rendering worthless an earlier bet of nearly $1 billion on a rival start-up, Snapdeal. The investment ranks as the largest private bet on an Indian tech company. But it also shines a light on the SoftBank founder Masayoshi Son’s big-ticket investment flops.

Mr. Son’s company was the largest investor in Snapdeal, making bets at valuations worth up to $5 billion. But Snapdeal fell behind in India’s e-commerce race. It was worth less than $1 billion by the time Mr. Son tried and failed to force a merger with Flipkart, which is now worth at least $12 billion. The decision to invest directly in Flipkart implies the Japanese company has given up on recovering value from the smaller company.

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Masayoshi Son has talked about the need to have a “blood kind of relationship” with the companies in which SoftBank invests.

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Shizuo Kambayashi/Associated Press

The Vision Fund, a $90-billion-odd investment vehicle managed by SoftBank, will now have a large but noncontrolling stake in Flipkart. It is Amazon’s main domestic rival in the battle for dominance of India’s online retail market, which Forrester Research reckons will be worth $64 billion in annual sales by 2021. But Mr. Son may lack the influence to guide Flipkart to a merger with the retail unit of Paytm, another Indian start-up that is backed by Alibaba, the Chinese giant partly owned by SoftBank.

Earlier this week, Mr. Son talked about the need to have a “blood kind of relationship” with companies in which SoftBank invests. But Snapdeal represents the second time he has lost control of the founders of a prominent Indian start-up. The first was at Housing.com, which fired its co-founder and chief executive after he pledged to give away his entire stake in the company to employees and attacked the board as intellectually incapable. The Japanese company ended up taking a back seat when Housing.com merged with a rival earlier this year.

The mess in India vividly illustrates the…

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