- SoftBank has massively disrupted startup investment with its $US92 billion Vision Fund.
- Its CEO Masayoshi Son says the company plans to do it again by raising a new $US100 billion fund every few years.
- He wants to invest $US50 billion a year.
- That’s an insane amount of money and will radically alter venture capital if it happens.
SoftBank CEO Masayoshi Son plans to throw an insane amount of cash at startups over the next decade, saying that the firm will raise a new $US100 billion fund every few years.
Son told Bloomberg in an interview that he plans to spend around $US50 billion a year. Bloomberg cited National Venture Capital Association figures showing that the entire US venture capital industry invested $US75.3 billion in 2016.
SoftBank is still in the process of closing its first $US100 billion fund, the Vision Fund. That has raised $US92 billion to date and SoftBank has already spent several billion on acquisitions and investments.
Son did not go into detail about where he planned to obtain the new tranches of cash. The first Vision Fund has backing from Apple, Qualcomm, and Saudi Arabia’s Public Investment Fund.
The Vision Fund is run by nine managing partners, and has dropped $US500 million into early-stage startup Improbable and $US7.7 billion for a stake in Uber, among other investments.
SoftBank insists it doesn’t compete with traditional venture capital firms, and in the UK is making inroads in forging connections with a tight-knit community of investors.
Still, peer investors in the UK are bemused by the Vision Fund’s activities, and describe it as a “spaceship.” Others are wary of Rajeev Misra, boss of the Vision Fund and Son’s right-hand man, describing him as a complex deal-maker.
The arrival of yet more multi-billion dollar funds will transform the market for startups. According to figures from Delta Partners, startups are finding it harder to raise seed-stage funding thanks to SoftBank driving a trend for megadeals.
Startups lucky enough to raise money from SoftBank benefit from being in a portfolio of top-tier companies like Uber and WeWork. Indian budget hotel network Oyo recently closed $US1 billion in new funding, led by SoftBank.
Founder Ritesh Agarwal told Business Insider earlier this month that “Son-san” was a visionary, who wanted to invest in startups with long-term impact, rather than seeking short-term exits.
“It’s about working with us, and the broader family of the Vision Fund, which has top companies in every segment worldwide, to help us gain knowledge, and how to share our proprietary knowledge… that’s the group you become part of,” he said.
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