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Tangentially related: Could someone explain to me why SoftBank often seems to be the only major company playing in the "traditional" VC space? We hear of the "S

Tangentially related: Could someone explain to me why SoftBank often seems to be the only major company playing in the "traditional" VC space? We hear of the "SoftBank round", but not, for example, the "Microsoft round" or the "AT&T round". Relative to many companies, SoftBank is not so big. And the bigger companies do have VC-style subsidiaries set up (e.g. Microsoft's M12). But SoftBank seems to make the highest profile investments by a significant margin. Is there any particular reason for this? Are they simply more tolerant of risk and therefore write bigger checks?

mushufasa 7y ago
Softbank isn't really a traditional company. And it's not really a bank. It started as a kindof publisher for software ("software bank"), so it has a lot of expertise in identifying and distributing new technologies, and it's essentially acted as a holding company for tech investments (including alibaba) since 2000. Really it's the manifestation of Masayoshi Son, who is an incredible entrepreneur, technologist, and investor. Apple+ more invest in the Softbank Vision fund, so the "SoftBank round" is already what you are thinking.
- KptMarchewa 7y ago
  >Apple+ more invest in the Softbank Vision fund, so the "SoftBank round" is already what you are thinking. Yeah, but by doing this they essentially outsource the process to Softbank. I'm assuming OP is curious why they won't make the decisions themselves.
  - mushufasa 7y ago
    The Vision Fund is, among other things, the manifestation of the idea that an order of magnitude more scale will qualitatively change VC investing. VC funds historically have been in the hundreds of millions, so you can invest up to tens of millions in any one company to keep a balanced portfolio. SoftBank's Vision is in the hundreds of billions, so it can invest up to hundreds of millions. This means they can single-handedly shepherd companies across the 'valley of death' or out-spend the competition to reach critical network effects... Essentially instead of just making bets, they're tipping the scales. The point of this strategy is the scale, which is only possible by raising billions from sovereign wealth funds and mega corporations. No one company could do it. Apple's net income last year was ~$60 billion. The Vision Fund launched with $100 billion.
    - Illniyar 7y ago
      >No one company could do it. Apple's net income last year was ~$60 billion. Apple has somewhere around 250 billion cash on hand, so they could definitely launch a 100$ billion fund on their own. Microsfot has about 150B. Google about 100B . Lots of companies can theoretically build such a fund.
rlucas 7y ago
Softbank deals are hardly what I would call VC-style -- certainly not "early" or even "mid stage" venture. Their very size tends to require much later-stage deals to absorb the large check sizes. This is growth or borderline "mezz" or "PE" frankly. In contrast, Microsoft Ventures / M12 will do proper early-stage venture, doing a check of $2 M or $5 M or $10 M into a growing but still uncertain company. Source: I have done single-digit $M deals with M12 and am a VC.
gnulinux 7y ago
I work in a SoftBank invested company. SoftBank started investing in us when the company was already ~7 years old and had a pretty high market share, with established technology, big customers etc. So, SB investment is not necessarily an early stage investment. Unfortunately, I don't know if our case is pathological or the common case.

mushufasa 7y ago

Softbank isn't really a traditional company. And it's not really a bank. It started as a kindof publisher for software ("software bank"), so it has a lot of expertise in identifying and distributing new technologies, and it's essentially acted as a holding company for tech investments (including alibaba) since 2000. Really it's the manifestation of Masayoshi Son, who is an incredible entrepreneur, technologist, and investor. Apple+ more invest in the Softbank Vision fund, so the "SoftBank round" is already what you are thinking.

KptMarchewa 7y ago
>Apple+ more invest in the Softbank Vision fund, so the "SoftBank round" is already what you are thinking. Yeah, but by doing this they essentially outsource the process to Softbank. I'm assuming OP is curious why they won't make the decisions themselves.
- mushufasa 7y ago
  The Vision Fund is, among other things, the manifestation of the idea that an order of magnitude more scale will qualitatively change VC investing. VC funds historically have been in the hundreds of millions, so you can invest up to tens of millions in any one company to keep a balanced portfolio. SoftBank's Vision is in the hundreds of billions, so it can invest up to hundreds of millions. This means they can single-handedly shepherd companies across the 'valley of death' or out-spend the competition to reach critical network effects... Essentially instead of just making bets, they're tipping the scales. The point of this strategy is the scale, which is only possible by raising billions from sovereign wealth funds and mega corporations. No one company could do it. Apple's net income last year was ~$60 billion. The Vision Fund launched with $100 billion.
  - Illniyar 7y ago
    >No one company could do it. Apple's net income last year was ~$60 billion. Apple has somewhere around 250 billion cash on hand, so they could definitely launch a 100$ billion fund on their own. Microsfot has about 150B. Google about 100B . Lots of companies can theoretically build such a fund.

rlucas 7y ago

Softbank deals are hardly what I would call VC-style -- certainly not "early" or even "mid stage" venture. Their very size tends to require much later-stage deals to absorb the large check sizes. This is growth or borderline "mezz" or "PE" frankly. In contrast, Microsoft Ventures / M12 will do proper early-stage venture, doing a check of $2 M or $5 M or $10 M into a growing but still uncertain company. Source: I have done single-digit $M deals with M12 and am a VC.

gnulinux 7y ago

I work in a SoftBank invested company. SoftBank started investing in us when the company was already ~7 years old and had a pretty high market share, with established technology, big customers etc. So, SB investment is not necessarily an early stage investment. Unfortunately, I don't know if our case is pathological or the common case.