SoftBank’s Vision Fund


 

It has been almost a year since SoftBank founder and CEO Masayoshi Son unveiled the Vision Fund; the world’s biggest private equity fund with ~$100 billion raised this year, led by London-based Rajeev Misra. SoftBank has already begun investing in various regions throughout the world; pumping over a billion dollars into various tech companies such as American tech company Nvidia, e-commerce firm Flipkart, and India’s ride-hailing service Ola. Backers from the first Vision Fund include Apple, Foxconn, the public investment fund of Saudi Arabia, Qualcomm, Sharp, and the sovereign wealth fund of the United Arab Emirates.

However, Son recently announced the $100 billion raised was just the first step in a plan that will likely a decade. Son has already started working on establishing a second Vision Fund in the next two or three years; stating SoftBank plans to invest in at least 1000 tech companies focused on areas like artificial intelligence and robotics.

“We are creating a mechanism to increase our funding ability from 10 trillion yen to 20 trillion yen to 100 trillion yen,” Son said. 100 trillion yen comes out to roughly $880 billion based on current currency rates.

Son, Japan’s wealthiest man, has become known for his bold, sometimes provocative, statements. The billionaire is also said to be a firm believer in the concept of the singularity, which states that the development of AI will abruptly trigger runaway technological growth, resulting in unfathomable changes to human civilization, and that it is on the horizon.

Although Son has not laid out how his plans to fund the spending, a SoftBank spokesman confirmed Son’s comments, adding that Son was speaking broadly about his investing plans.

According to the Nikkei report, the Vision fund has already committed a total of ~$26.3 billion in investment since its was created in May. Recently the Vision Fund announced a $250 million cash injection in Slack, a business application, while also doubling down on its investment in WeWork and Sofi. SoftBank is also reportedly interested in investing $10 billion in US ride-hailing service Uber, acquiring up to 20 percent of the company.

Right now, approximately half of the capital raised from the initial fund came from Saudi Arabia and the United Arab Emirates; however none of the current companies backed come from the Middle Eastern or North African regions. Traditionally startups in these regions lack the early funding to grow startups to a size that will attract big investors. Walid Mansour, chief investment officer at Middle East Venture Partners (MEVP), told CNN that startups in the region are too small to attract the big bucks. An investor the size of the SoftBank backed Vision Fund would most likely want to back companies worth more than $1 billion, Mansour told CNN.

Son’s plans may be great news for startups looking to expand, but could become another problem for some investors who have raised concerns that the excessive investment could lead to overvalued companies with little incentive to go public, whilst also making it more difficult for other venture capital firms to compete for certain startup investments.

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