VCs can’t Fathom SoftBank’s Big Vision
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.”