VCs can’t Fathom Soft­Bank’s Big Vi­sion

The Economic Times - - Disruption: Startups & Tech -

Business Insider

Lon­don: Ven­ture cap­i­tal­ists across Europe are “baf­fled” and “be­wil­dered” by the size and fre­quency of the tech in­vest­ments be­ing made by Ja­panese tech gi­ant Soft­Bank.

Soft­Bank shocked VCs world­wide last Oc­to­ber when it an­nounced plans to raise a $100-bil­lion “Soft­Bank Vi­sion Fund”.

Mark Tluszcz, the CEO of Man­grove Cap­i­tal Part­ners, who made $200 mil­lion from a $2-mil­lion early in­vest­ment into Skype, told Business Insider: “Most in­vestors are think­ing this is in­sane. This is crazy.”

So far, Soft­Bank has raised $93 bil­lion (£70 bil­lion) from an eclec­tic mix of in­vestors — in­clud­ing Ap­ple, Qual­comm, Larry El­li­son (the bil­lion­aire founder of Or­a­cle), and the Pub­lic In­vest­ment Fund of the King­dom of Saudi Ara­bia — and it ap­pears to be in­vest­ing the money at a phe­nom­e­nal pace.

The in­vest­ment the­sis be­hind the fund was ex­plained by Masayoshi Son, chair­man and CEO of Soft­Bank Group, when it was an­nounced.

“With the es­tab­lish­ment of the Soft­Bank Vi­sion Fund, we will be able to step up in­vest­ments in tech­nol­ogy com­pa­nies glob­ally," said Son, who is Ja­pan's rich­est man. "Over the next decade, the Soft­Bank Vi­sion Fund will be the big­gest in­vestor in the tech­nol­ogy sec­tor. We will fur­ther ac­cel­er­ate the in­for­ma­tion revo­lu­tion by con­tribut­ing to its de­vel­op­ment."

Soft­Bank has re­cently been declar­ing huge, multi-mil­lion dol­lar tech in­vest­ments and ac­qui­si­tions al­most every day.

Tluszcz, who is based in Lux­em­bourg and wel­comes the fund him­self as an early-stage in­vestor, said that some of the world’s best known VC funds are con­cerned they’ll be priced out of new startup fund­ing rounds, adding that they won’t have the same lev­els of cap­i­tal to back the best star­tups over a sus­tained pe­riod of time. That es­sen­tially means they’ll be left with a less valu­able stake in the com­pany when it ex­its.

“Now they’re no longer the big boys on the block and they're go­ing to have to ad­just them­selves,” said Tluszcz. “It's go­ing to drive up prices and they’re moan­ing about it.”

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