"I'd rather have their capital cannon behind me."
Uber's CEO Dara Khosrowshahi's comment about SoftBank's Vision Fund at Goldman's tech conference
Vision Fund 2
Last month, SoftBank announced its second Vision Fund to invest in tech companies developing AI technologies around the globe.
A quick recap - Vision Fund 1 raised USD 98 billion, and according to the company, the first Vision Fund has invested in 82 companies. To put the magnitude in perspective, its fund size was almost double the investments made by U.S. venture capitals in 2018.
Masa said in the earnings call that he had secured USD 108 billion in pledges for its Vision Fund 2 from investors including Microsoft and Apple.
Vision Fund is not PE
Financial Times reported that the CEOs and founders of the companies invested by the Vision Fund will meet in LA next month for a private gathering. This gathering is a part of Masayoshi Son's grand plan to create an "ecosystem" of his portfolio companies to accelerate growth.
Unlike PE firms, Vision Fund typically owns a minority stake in its portfolio companies. Therefore, they cannot command those companies to move in a certain direction.
Vision Fund invests in a variety of technology sectors, but the companies share one thing is common - Masayoshi Son meets with every founder in person before any deal is signed.
This strategical chemistry between founders and Masa creates a soft but yet non-neglectable bonding among these companies.
"If there is a commercial deal that will happen between two portfolio companies, it will be faster and easier than a non-portfolio company," says Vijay Shekhar Sharma, the founder of Paytm.
Impact of the Vision Fund
Softbank has massively disrupted the investment community in Silicon Valley. Son's large checks helped inflate valuations in pre-IPO private companies, forcing other VCs to write bigger checks or drop out of deals.
Only history can tell the real impact of this massive fund, but for me, it looks like the Vision Fund now highly depends on Masayoshi Son's charisma as an individual which looks difficult to copy or even hand over to the next generation, however, it is certainly an unseen way to build a global scale technology group to push innovation forward.