All Hail the Unicorn Maker: Is SoftBank’s Vision Fund Good for Tech?


Masayoshi Son has always been a bit of a gambler. In 2000, during the first dot com bubble, the 59-year-old SoftBank founder lost a record $70 billion. Undeterred, he continued with his dream of driving the technology industry forward.

Now, Son has an even bigger piles of chips to risk. The SoftBank Vision Fund, inaugurated earlier this month, has endowed the Japanese investor with almost $100bn raised from Saudi Arabia, Abu Dhabi and Apple, among others, to throw at high-tech ventures worldwide.

Not everybody is happy. Citing SoftBank’s recent acquisition of British VR firm Improbable Worlds for $502m, when its previous value had been around $100m, Pitchbook Data Inc.’s Kyle Stanford told LiveMint of a “fear” that “when valuations get too high it limits exit opportunities.”

Elsewhere there have been murmurs of discontent that Son and co are set to hyper-inflate the market, making unicorns of mules and pushing the tech industry closer towards another burst bubble.

The Vision Fund will not make any investments worth below $100m. Which begs the question: is there a sufficient market for such high-end dealmaking? David Sola Varela, an analyst at Caixa Capital Risc, is doubtful.

“The answer is not easy if we refer to the calculations where, according to Pitchbook, the mean venture round in 2015 was $10.6m. Because of this that I see SoftBank as less of a threat to the current VC market, and more of an opportunity to the not-so-crowded later-stage funding ecosystem–and even as a possible new door to the coveted exit that we all look for through M&A and IPOs.”

If, as Son has suggested, the Vision Fund will look to create new investment rules, it makes sense to put the majority of cash into the US, which has 103 of the world’s 197 unicorns, according to CB Insights.

Europe, whose unicorns number just 20, is unlikely to see much of SoftBank’s billions. But its markets could see significant changes in terms of the industries Son is looking to promote with his war chest.

Robotics has been singled out as a target for investment. Michael Mathiesen, of 7 Star Investments, thinks that shifting global trends towards cutting-edge tech like it will be a major advantage for SoftBank. “If you’re at a government level and want to change an emphasis to robotics, or something similar, you need big funds to change the model.

“I think the giant funds like this one are definitely useful for major projects and pushing trends,” he adds.

Mathieson is concerned that Son’s money will come without the required industry knowledge or savvy. CEOs are already too concerned with today’s share price, he argues: if hundreds of millions come at once, their outlook could shorten even more. “If they are not careful they can be used to hype the valuation,” he says. “Which would be stupid for everyone because you have to deliver.”

Others are happy about the news. Emanuele Levi is general manager at 360 Capital Partners. He believes that the Vision Fund can help plug a gap in the number of buyers available to entrepreneurs working in verticals at the pioneering edge of tech. He says, “To have $93bn they will be buying a lot of companies, and we have a lack of buyers.”

Not only that, but Levi hopes SoftBank’s move will encourage other multinational organizations to club together and build megafunds of their own. The US “probably doesn’t need one,” he jokes. But Europe should definitely take notes.

“If we believe these industries are going to be key in the coming years, Europe should have a similar, sovereign-style fund to protect the European players.”

So, when it comes to the voice of VCs, the jury is still out on SoftBank’s mega-money play. Son has the pedigree to pick winners worldwide (like $90bn Alibaba, into which he sloughed an early $20m). But he’s lost it all too. Will Son’s new fund set another pile of tech chips tumbling?