Businesshala News Exclusive | SoftBank Invests in Artificial-Intelligence Startup Qraft Technologies

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Kraft to use $146 million investment to fuel US, China expansion

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Kraft’s US CEO Robert Nestor said that founded in 2016 by its chief executive Marcus Hyung-sik Kim, the Seoul-based firm plans to use the investment to further its expansion in the US and other key markets.

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The companies declined to disclose Kraft’s valuation.

Tokyo-based SoftBank is one of the world’s largest investors in technology companies, with its Vision Fund and successor managing a portfolio of more than $100 billion.

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Asset managers, once skeptical of the value of AI and heeding their employees’ concerns that programs will replace human stock- and bond-pickers, are now looking to add data-analysis tools that will help them recover from chronic poor performance. Can help deal with and justify the fees. They charge investors.

The awakening of the industry has started an arms race for hiring programmers who can develop those tools and spot hidden market signals in the data. Those signals can be fleeting, with firms delivering decent returns for a few months before other investors see the same trend. And the cost of hiring teams of technologists in every demanding industry from manufacturing to finance can be cost prohibitive.

“Asset management has probably been the slowest adopter of AI outside of business,” Mr. Nestor said. “Many firms are now going through the process of saying ‘we need to think about this.’ Most of the medium-sized and small firms do not have the capabilities. This is an opportunity for us.”

Kraft hires former BlackRock executive Mr. Nestor Inc.

and Vanguard Group, planning to introduce the company’s AI-investment engine to other asset managers late last year. Mr Nestor said the company intends to build out sales teams in key markets, including the US and China.

Qraft has 50 employees, most of whom work on the firm’s core AI software. Those employees account for about a third of the company, with the remainder being held by outside investors, Mr. Nestor said. “SoftBank” [now] makes up a substantial portion of it,” he said, though some smaller venture-capital firms and institutions are also investors. He declined to take his name.

The startup has been on SoftBank’s radar for a few years, and in early 2020 its Vision Fund considered investing in Kraft before finally passing. Kentaro Matsui, managing partner at SB Investment Advisors, said SoftBank revisited the idea a year later, but this time the investment was made by the company itself.

“We wanted to test how we could use AI, and we thought Craft was the best way to do that,” Mr. Matsui said.

Write Justin Baer at [email protected]

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