SoftBank’s second Vision fund accelerates the pace of investing

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SoftBank’s second Vision fund invested about $ 13 billion in more than 50 companies in the second quarter, according to two people briefed on the numbers, marking a sharp increase in the pace of its investments.

In the first three months of the year, the fund invested less than $ 2 billion in less than two dozen companies, according to public information. Many of his latest investments had yet to be publicly announced, one of the people said.

SoftBank’s spike in spending comes as other large-pocketed investors, such as Tiger Global Management, pumped money into high-value start-ups, contributing to the busiest first half on record for the year. private technology financing.

The first $ 100 billion Vision fund rose to prominence for taking multibillion-dollar stakes in companies such as China’s ridesharing app Didi Chuxing and flexible task force WeWork, subsidizing hefty losses then that they faced competitors in large markets.

His returns were boosted recently after a number of companies he had invested in, including South Korean e-commerce group Coupang and US meal delivery company DoorDash, entered the public market.

With the second Vision Fund, the Japanese group changed its approach, placing more modest bets on healthcare and software companies rather than multibillion-dollar investments in urban mobility and heavy industries, such as construction. .

The original Vision Fund was to invest at least $ 100 million per trade as part of a deal with its investors, one person briefed on the matter said, limiting its ability to invest in relatively young companies.

SoftBank, led by Managing Director Masayoshi Son, committed $ 30 billion of its own capital to the new fund after failing to raise capital from outside donors, such as government funds in Abu Dhabi and Saudi Arabia.

Deep Nishar, senior managing partner of Vision Fund in the United States, said the second Vision Fund has started to “partner at earlier stages of a business’s life” in an attempt to find attractive investments.

“In today’s market environment, valuations are more attractive at the early stages of a company’s lifecycle compared to the very late stage,” Nishar said.

Video communications start-up Mmhmm ​​said on Wednesday it had raised $ 100 million in so-called Series B funds led by the second Vision Fund. The fund also led a $ 140 million second round of funding for artificial intelligence firm Vianai Systems in June.

In other startups, such as celebrity video messaging app Cameo, the second Vision Fund has overtaken rival venture capitalists, investing tens of millions of dollars rather than hundreds of millions. at a time.

SoftBank does not expect to raise funds from outside investors for the second Vision Fund, although it may commit more of its own capital, a person familiar with the matter said. The company originally said it would raise up to $ 108 billion for the fund.

Vision Fund executives have sought to downplay WeWork and other large-scale setbacks of the first fund, touting a renewed focus on start-ups using artificial intelligence.

The new fund had invested around $ 20 billion in more than 90 start-ups and planned to invest in at least 30 more companies, said two people familiar with the figures. By comparison, the first Vision Fund invested $ 85.7 billion in less than 100 companies.

“There is a reduction in the number of emerging companies that require a lot of capital to be successful initially,” Nishar said.

SoftBank has not always been successful in investing in small businesses. Consumer goods start-up Brandless and dog walking app Wag both ran into problems after receiving large investments from the original Vision Fund.

The second Vision Fund has not completely backed down from the big bets. In May, the fund led a round of $ 775 million investment in Perch, one of several well-funded groups aiming to shore up Amazon’s independent merchants.

Several partners and other senior executives recently left the team that manages the two Vision Funds, including Ervin Tu, a partner who oversaw investments in ByteDance and ride-sharing company Uber. Jeffrey Housenbold, who has made many of the fund’s biggest consumer investments in the United States, left earlier this year.

SoftBank said it has added 30 people to its investment team in the past four months. In February, the fund hired Nagraj Kashyap, a senior executive at Microsoft, as a managing partner to lead investments in consumer companies.

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