How You Can Beat SoftBank at Its Own Game

SoftBank Group Corp. (OTCMKTS: SFTBY) might be in trouble.

Today, anyone can make life-changing profits by doing exactly what SoftBank does, but simply doing it better. And believe it or not, it's easy.

Softbank has built a reputation as a startup investor, pouring money into Silicon Valley ideas in the hopes of owning the next Facebook Inc. (NASDAQ: FB). Its Vision Fund has $100 billion in startups, making Softbank stock a backdoor play on the startup market.

In addition, it has a piece of Sprint Corp. (NYSE: S), Yahoo Japan, and Brightstar Mobile. Its portfolio spans telecoms, broadband, Internet commerce, computers, and microprocessors.

That all sounds great. But it turns out SoftBank is a prime example of what not to do when investing in startups. Here's where it messed up.

SoftBank Is Eating Itself from the Inside Out

Softbank is betting it can use its money to create the next big winner by cutting costs and growing market share. But now it's finding that it is competing with itself in a race to the bottom.

Specifically, it is sparking a price war in Latin America between ride sharing and food delivery services Uber Technologies Inc. (NYSE: UBER), Didi Chuxing, and Rappi.

The funny thing here is that SoftBank owns chunks of all three companies.

Basically, in order to make them profitable, Softbank has to beat down the competition from the others and secure market share. It would be stuck throwing money at one company and hurting the others. Some have called that a circular firing squad, and of course, it is bad for SoftBank's business.

It's almost as if it got so big there was nothing left out there for it to finance. Softbank's size gets in the way of its bottom line.

And that's a cue for individual investors who want to tackle startup investing...

How Anyone Can Beat SoftBank

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Thankfully, a backdoor play on startups isn't necessary these days. In fact, barriers to angel investing for individual investors have never been so low. And the profits can be life-changing.

The Jumpstart Our Business Startups (JOBS) Act of 2012 made it so that investors could put smaller stakes in startups, so anyone can claim a piece of the pie.

That gives the average investor an advantage over SoftBank here. The company just gave everyone an example of what not to do. It's an opportunity for individual startup investors to better diversify their decisions and avoid the SoftBank trap.

As an individual investor, you can focus more on the pros and cons of specific investments instead of just buying up every new tech startup that comes along. That's beating SoftBank at its own game.

Also, you don't need millions of institutional funds to be a startup investor today. Through the Angels & Entrepreneurs Network, you can begin startup investing with as little as $5.

Remember that SoftBank sunk huge amounts of cash into the office leasing startup, WeWork, which was a complete disaster for it. WeWork was forced to postpone its IPO and plummeted in value.

You no longer have to wait for new companies to go public or even try to backdoor through SoftBank or a similar company. You can start on the ground floor...

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