It’s hard to remember any single investor casting such a shadow over the venture capital space, but SoftBank Vision Fund was a behemoth in 2017, and at one stage seemed to be almost ever-present at the top of the headlines investing big money.
News of SoftBank Vision Fund first broke in October 2016 when telecoms and internet group SoftBank, already one of the preeminent names in corporate venturing, announced plans for a $100bn fund that would be equipped with $25bn of its own capital as well as $45bn from Saudi Arabia’s Public Investment Fund.
The fund reached its first close in May, having accumulated $93bn from LPs that also included a reported $15bn from Abu Dhabi’s Mubadala Investment Company and $1bn each from electronics producers Apple and Sharp, chipmaker Qualcomm and contract manufacturer Foxconn.
By that point SoftBank had already made some big moves, participating in a $500m round for online lending platform SoFi and a $330m round for India-based ride hailing platform Ola in February, and providing $300m for co-working space provider WeWork the following month. The company had also agreed to a $3.3bn acquisition of Fortress Investment Group, an investment manager with $70bn of assets under management.
The firm’s largest deal of the year however, took place in April when it invested $5bn in China-based on-demand ride platform Didi Chuxing as part of a $5.5bn round also featuring Silver Lake Kraftwerk, China Merchants Bank and Bank of Communications that reportedly valued the company at more than $50bn.
The first close of Vision Fund was announced in the same month as the vehicle led a $502m series B round for VR development software producer Improbable and a $360m round for liquid biopsy system developer Guardant Health. It also paid $1.4bn for a 20% stake in financial services and e-commerce company One97 Communications and supplied $100m for Brazil-based ride hailing app 99.
Between SoftBank and its Vision Fund, the company has since provided 10-figure amounts for Singapore-based on-demand ride service Grab, India-based e-commerce firm Flipkart, satellite internet operator OneWeb, biopharmaceutical company Roivant Sciences and WeWork, in which it invested $4.4bn in August, and nine-figure amounts to a wider range of companies.
SoftBank’s formation of Vision Fund gave it significant power but it is important to remember the move was part of an ongoing wider strategy in which it is shifting from early-stage deals to larger, late-stage investments. It had already shut down corporate venturing subsidiary SoftBank Capital in 2015, and in February this year it sold a 54.5% share of SoftBank Asia Capital to Foxconn for $600m.
Although it has made multiple investments in sectors such as online lending, biotech and ride hailing, in a general sense the firm’s larger investment strategy appears to have three distinct patterns.
The first involves the gaining of stakes in large e-commerce or mobile service providers in specific markets (Ola, Flipkart, One97 and short-term accommodation booking platform Oyo in India; Grab in Southeast Asia), allowing it to acquire a central position in their online services industries.
The second is to take a substantial position in market leaders in specific online or mobile subsectors. That includes OneWeb and WeWork, but also the likes of workplace messaging platform Slack, tech-focused real estate brokerage Compass, urban farming company Plenty, sports memorabilia seller Fanatics and AI-equipped insurance provider Lemonade, all of which have received nine-figure investments from SoftBank this year.
The third prong would be SoftBank’s investment in cutting-edge software producers and chipmakers such as Arm, the semiconductor maker it acquired for about $32bn in 2016. It took a $4bn stake in publicly-listed graphics processor producer Nvidia in May, and made substantial investments in endpoint cybersecurity software provider Cybereason, navigational technology developer Brain Corporation and autonomous driving software developer Nauto.
SoftBank has reportedly added almost $5bn to Vision Fund and still aims to close it at $100bn. It isn’t finished either. The fund, along with Dragoneer Investment Group and General Atlantic, is in ongoing talks with Uber to purchase at least $7bn of primary and secondary shares, though at present that deal is hanging on the prospect that Uber’s early investors will be willing to sell their shares at a step discount.
CEO Masayoshi Son said last month SoftBank is already planning successor funds that could collectively dwarf the original, though how much of a pipedream that is, considering the first is yet to be closed, remains to be seen. What is clear is that regardless of how fast it is spending money – and it is going through that $98bn very quickly – there seem to be no competitors, among corporates or VC firms, that can match the size of its wallet.