How much is too much? How much venture capital do you raise, before you can be certain of possessing the ability to invest in every niche, every market out there, if you so want. This is a question which will have many different interpretations and no single answer. However, Masayoshi Son led Softbank’s Vision Fund comes very close.
The $100 Billion fund recently closed its first round, raking in $93 Billion worth of investments led by a fat, $45 Billion check from Saudi Arabia. The fund is also backed by many who’s who of the industry including, Apple, Foxconn and Qualcomm. This also means that Softbank and by extension Son, now hold the keys to the largest amount of private venture funding in one place, the world has ever seen.
The Biggest Fund In The World
To put things in perspective, the Vision Fund, by the time it completes funding (which should be soon since there are only $7 Billion to go) will be worth almost 15 Sequoia Capital. Or, it would be worth more than around 16 HCLs. For further perspective, less than 70 countries in the world have GDPs equal to, or more than $100 Billion. So yes, the amount is huge and since it will be being invested into companies working with new-age technologies, Masayoshi Son does possess the potential to influence this world’s future in a big, big way.
And Son is not one to be daunted by the scale, or the magnitude of the quest he is embarking upon. Far from it. He has already stated a 300-year plan for Softbank that involves the firm becoming the world’s most valuable company. At present that title is held by Apple, with a market cap in the neighborhood of $800 Billion. Meanwhile, Son has proved time and again that he is not afraid of making big investments — consider the Didi Chuxing investment of over $5.5 Billion — and this fund gives him the power to do just that.
Son also believes that the future is going to merit these investments. He believes that the future is going to be bigger than anything we have seen so far. In February he had said:
We saw a big bang in PCs, we saw a big bang in the internet. I believe the next big bang is going to be even bigger. To be ready for that, we need to set the foundation and that foundation is SoftBank Vision Fund.
So yes, AI, Space, VR, AR– all of these fantastic technologies, could well see a lot of interest from Softbank in the coming years. However, the promise of creating the companies of the future also carries some grave risk with it.
Risks associated with too much money
At the end of 2016, there was over $800 Billion of unspent money held by private equity firms (Data from Bloomberg) and bringing in more money simply means the potential for more companies to get funded. But that is a good thing right? Wrong.
See, while there may be a lot of companies, there are only so many domains they can operate in. Put in too much money into a particular domain and you would have created a ton of overvalued companies competing with each other for the same business. The result? It all goes down — much like how the Internet bubble burst back in the 2000s.
Although, the bubble bursting did not exactly leave everyone poor you know. Look at Son for instance, he was part of the bubble and had stakes in around 800 companies. 800 companies! While hundreds upon hundreds of his companies went under and his stock fell by 99 percent, the few that survived included the likes of Alibaba and Yahoo!. That 20 million stake now has a value in excess of $90 Billion.
And while Son did receive the rather dubious honor of being the man who has lost the most money in the history of the world, he is still a billionaire, one of the world’s most powerful people and, is now leading the biggest VC fund the world has ever seen — one which has the potential to shape our future. That is a comeback for you.
So you see, Son is not really one to shy away from taking risks. And with the Vision Fund as well, he is maneuvering Softbank into a situation where it will have a direct say in most of the companies it invests in. Son had told investors this as early as February.
Most of our investments will range between 20 and 40 percent, making us the largest shareholder and board member, in a position to discuss strategy with the founders.
And if even half of these bets take off, can you imagine the impact Softbank will have on the world of tomorrow?