SoftBank Group on Thursday announced that it has secured $108 billion for its second Vision Fund, a late-stage venture capital vehicle whose original $100 billion edition turned Silicon Valley upside down. The final size is expected to be even larger.
What to watch: SoftBank listed around a dozen groups that had signed memoranda of understanding to invest, including Apple and Microsoft. There is no mention of Saudi Arabia's sovereign wealth fund, which was the largest Fund 1 contributor with a $45 billion slug, although that doesn't necessarily mean it's not involved.
The original Vision Fund, raised in 2017, invested in such companies as Uber, DoorDash, GM Cruise and WeWork.
- SoftBank itself plans to commit $38 billion, up from $28 billion the first time around.
- Other return backers include Apple and Foxconn.
- In addition to Saudi, other missing Fund 1 limited partners include Qualcomm, Sharp and a sovereign wealth fund of the United Arab Emirates.
- New investors include Microsoft, Standard Chartered, Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, MUFG Bank, Dai-ichi Life Insurance Co., SMBC Nikko Securities, Daiwa Securities Group and Kazakhstan's sovereign wealth fund.
Microsoft could be a particularly intriguing addition, based on a WSJ report indicating SoftBank plans to encourage its "roughly 75 companies to shift from Amazon's cloud platform to Microsoft’s."
- No word on how it would convince existing portfolio companies to make such a fundamental switch, although it certainly could have quid pro quo leverage over future investment targets.
The bottom line: Silicon Valley grumbled through the first Vision Fund, arguing that it overcapitalized companies and persuaded certain founders to chase market share without regard for underlying fundamentals. Expect those complaints to get even louder.
