Japan’s SoftBank Group Corp. is pumping $1 billion into OneWeb Ltd., which aims to use hundreds of satellites to provide internet access in rural areas and developing countries, in a fundraising round that values the startup at roughly $2.5 billion.
OneWeb’s current investors are also giving $200 million in the latest fundraising, the company announced Monday. The fresh funds ensure that OneWeb has the firepower to build and launch more than 640 satellites by the beginning of the next decade. The company’s goal is to offer fast internet-via-space connectivity to everything from vehicles in urban areas to rural homes in the U.S. and schools in developing countries.
SoftBank, an early financial backer of some of the largest internet companies on both sides of the Pacific, is set to become the fledgling company’s largest shareholder with a roughly 40% stake, said Greg Wyler, OneWeb’s founder, executive chairman and chief architect.
The partnership gives Mr. Wyler’s team—which also counts British billionaire Richard Branson,Qualcomm Inc. and several other U.S. and foreign companies as backers—momentum to deploy the planned satellites while accelerating work on faster, more capable technology. OneWeb’s rivals include billionaire entrepreneur Elon Musk’s Space Exploration Technologies Corp, or SpaceX, which has announced preliminary plans to launch as many as 4,000 satellites, and Boeing Co.
For SoftBank, OneWeb could create synergies with the mobile-phone businesses and portfolio of technology companies the Japanese telecommunications and internet conglomerate has assembled over the years. SoftBank is now putting its heft squarely behind a proposed constellation of low-earth orbit satellites unlike any previously launched.
“OneWeb is a key strategic investment for us to connect many of our portfolio companies,” SoftBank Chief Executive Masayoshi Son said in an interview.
OneWeb, which previously announced a joint manufacturing venture with Airbus Group SE, is building a highly-automated manufacturing facility in Florida intended to churn out modular satellites faster and cheaper—projected to be under $1 million each—than ever before. The concept is designed to shake up the industry by introducing manufacturing procedures akin to those currently used for medical devices or airplane equipment, replacing time-consuming and customized hands-on satellite assembly practices.
If his ambitious plans pan out, Mr. Wyler says the company expects to have roughly 100 million subscribers globally by 2025, with officials designing a new generation of satellites hundreds of times more capable than today’s most advanced versions. The ultimate aim, he says, is to bridge what has been called “the digital divide” world-wide.
But in the interim, OneWeb still has to demonstrate the reliability of its assembly line, deploy ground equipment and antennas that are less expensive than existing models, and prove that its prices and the quality of its service can attract residential and business customers not connected to fiber.
In an interview over the weekend, Mr. Wyler said more than 90% of satellite components are already under contract and ground equipment designs have also have been completed. “We are locked and loaded,” he said, adding that “every piece of technology across the system is very well understood.”
There has been a resurgence in interest in small satellites, with dozens of manufacturers, service providers and launch companies scrambling to grab market share. With its prominent backers and high-profile chairman, OneWeb has been at the forefront of this trend.
SoftBank said the investment will create roughly 3,000 engineering, manufacturing and support jobs in the U.S.
Started as a software distribution company in 1981, SoftBank operates Japan’s third-largest mobile phone company, owns Sprint Corp. in the U.S. and holds significant stakes in Chinese e-commerce giant Alibaba Group Holding Ltd. and Japanese internet portal Yahoo Japan Corp.
Mr. Son this summer made the biggest bet of his career with a $32 billion deal to buy ARM Holdings PLC, a British chip maker that designs most of the world’s smartphone chips.
A few months later, SoftBank said it would establish a $100 billion technology investment fund with Saudi Arabia’s sovereign-wealth fund and other partners, a vehicle Mr. Son says will drive SoftBank to the forefront of future technologies like artificial intelligence, smart robotics, and the Internet of Things, in which everyday objects are connected online.
A fast, ubiquitous connection provided by OneWeb will support a more seamless application of these technologies, Mr. Son said.
“We need connectivity. For connected cars, we need connectivity. For [Internet of Things], we need connectivity. So OneWeb is the best way to connect the entire world,” he said.
Following a meeting with U.S. President-elect Donald Trump earlier this month, Mr. Son said he planned to invest $50 billion in U.S. startups, and said the money would come from the $100 billion fund, tentatively named the SoftBank Vision Fund. Mr. Son has said he intends to focus more of his time on investments, saying he wants to become the Warren Buffett of technology.
Write to Andy Pasztor at andy.pasztor@wsj.com, Alexander Martin at alexander.martin@wsj.com and Rolfe Winkler at rolfe.winkler@wsj.com