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Illustration: Aïda Amer/Axios

While Softbank's first Vision Fund was all about "picking winners" in a sector and arming them with a lot of capital to fend off their rivals, the Japanese giant's second Vision Fund has a different strategy: backing as many worthy startups as possible, as early as possible.

Why it matters: Diversified portfolios have been a fixture of seed investing for a while, but with the entrance of investors like Tiger Global into the startup scene, it’s a strategy no longer confined to the earliest stages of venture.

By the numbers: Last quarter SoftBank's Vision Fund 2 invested in 47 startups ($14.2 billion including follow-on capital from VF 1), and has already backed another 27 since July 1.

  • "You'll see more diversification — [SoftBank's Vision Fund 2] is coming in at earlier stages. ... The idea is to be earlier in the cap table and be able to participate in the next round," one person familiar with the Vision Fund's thinking told Axios.
  • Meanwhile, Tiger Global has already been pre-marketing its upcoming $10 billion growth equity fund to back more internet startups while deploying its recently closed $6.7 billion fund at a furious pace.

Between the lines: Startups, especially at the mid-to-late stages, are the new stock market in some ways.

  • With companies staying private longer, crossover funds have been dipping into backing pre-IPO companies for years now to capture gains from the growth that used to happen post-IPO — but this trend has significantly accelerated.
  • And there's a startup market for investors to index. The pandemic forced a lot of activities and industries to move online, boosting the explosion of Internet-enabled startups that was already happening. (Both SoftBank and Tiger Global have touted to investors their success in seeing and backing a large chunk of the world's digital startups.)
  • And of course, there's optionality: Get on the cap table early enough, and be able to participate in subsequent rounds if the startup turns out to be a gem — or write off the smaller initial investment if it's a dud.

The bottom line: Historically, nine out of 10 startups fail, but that's not deterring investors like SoftBank and Tiger from writing a lot of checks.

Go deeper

Bryan Walsh, author of Future
Sep 19, 2021 - Technology

Synthetic biology leader Ginkgo Bioworks goes public

Ginkgo Bioworks ringing the bell at the New York Stock Exchange. Photo: Ginkgo Bioworks

Ginkgo Bioworks — a Boston-based company that wants to make biology as easy to program as a computer — began trading on Friday after going public via a SPAC.

Why it matters: Ginkgo's multibillion-dollar offering is a milestone in the maturation of synthetic biology from a science to a true industry.

Gaming CEO calls on industry to help fight climate change

"Catalyst Black." Screenshot: Super Evil Megacorp

Gaming CEO Kristian Segerstrale is calling on leaders in his industry to take action on climate change, after completing a $1.4 million fundraising campaign this summer.

Why it matters: Gaming's pandemic-fueled boom creates an opportunity, and maybe even an obligation, to do some good.

3 hours ago - World

U.S. releases updated vaccination, testing rules for foreign travelers

Photo: Patrick T. Fallon/AFP via Getty Images

Foreign travelers will be allowed entry to the U.S. beginning Nov. 8 if they can provide proof of full COVID-19 vaccination with a shot authorized by the World Health Organization and a negative test within three days of departure, the White House announced Monday.

Why it matters: The updated guidance, which exempts children under the age of 18 from the vaccine requirement, is intended to provide further clarity for airlines and foreign nationals who have been restricted from traveling to the U.S. since early 2020.