Longtime Silicon Valley hands are still aghast that an investing firm can find a way to pour $100 billion into technology companies like SoftBank’s Vision Fund hopes to do.
But the Japanese conglomerate disclosed late Tuesday that its giant investing funds had already appropriated just under 40% of its pool of cash. That should quiet some critics who say it is impossible to spend that much money that quickly.
The Vision Fund and its companion, the $6 billion Delta Fund, invested $27.5 billion through the end of last year, according to a new quarterly earnings report from SoftBank. When you throw in the $7.7 billion invested in Uber and $4.6 billion in Didi earlier this year — “significant subsequent events” in the parlance of the report — the funds have spent $40 billion of their eventual $106 billion pool.
SoftBank chief Masayoshi Son held up the Uber deal’s size as an example of how his firm had changed the game in Silicon Valley.
“$8 billion for one investee — which is probably impossible for a traditional venture capital [firm] to make,” he said, noting that many rival funds have $1 billion or smaller to invest. “We invest in unicorn companies that [are] the leader of a certain segment.”
Not all of that $40 billion is from new investments. Several deals struck by SoftBank are being “offered” to the Vision Fund, most notably a 25% stake in Arm Holdings, the British chip company. That’s $8 billion of the fund right there.
The Vision Fund has upended tech investing in Silicon Valley by chasing after some of the sector’s flashiest companies — a phenomenon that has at times both frustrated and amazed rival investors. The fund, which is backed heavily by sovereign wealth funds in Saudi Arabia and Abu Dhabi, has bought ownership stakes in companies like Slack, Fanatics and WeWork. It also has invested in some public companies like Nvidia.
A total of 26 companies are as of now part of the Vision Fund, according to Son, all of whom he says are “the no. 1 players.”
There’s no signs that he is slowing down. SoftBank on Tuesday announced that it would try to separate the company’s investing and telecommunications arms, which could allow Son more time for dealmaking.
The Vision Fund, which has raised about $92 billion of its $100 billion target, expects to close in the second quarter of this year, the earnings reveal. The fund launched last year and is planning to invest its enormous sum in its first five years.
It’s making quick work.
Source: https://www.recode.net/2018/2/7/16984170/softbank-vision-fund-40-billion-technology-earnings