SoftBank the Japanese tech giant that previously launched worlds biggest tech fund i.e $100 billion has now ready with Vision Fund 2 and it is even bigger than the previous fund, its capital is about $108 billion.
The aim of the Vision Fund 2 is to continue the development of AI-based advancements in perspective start-up companies which could one day result in products used by millions of consumers across the world.
“The objective of the Fund is to facilitate the continued acceleration of the AI revolution through investment in market-leading, tech-enabled growth companies,” SoftBank Group wrote in a filing with Tokyo Stock Exchange.
The Japanese conglomerate itself plans to invest $38 billion in the fund, it said in a statement. Some prominent corporations who have signed MOUs so far are Apple, Foxconn Technology Group.
One major coup was the involvement of Microsoft, which SoftBank approached for a $5bn contribution.
SoftBank’s Vision Fund is also getting support from Japan’s financial industry including units from Japan’s top three banks MUFG, Mizuho and Sumitomo Mitsui Banking Corp being joined by two of the country’s biggest brokers including Daiwa and the second-largest life insurance group.
Looking at the list, one analyst at a Japanese brokerage said: “This is literally all of Japan backing the Vision Fund II.” The line-up shows how SoftBank has emerged as one of the most important fee payers, with banks fighting for its work, led by Mizuho and Goldman Sachs.
Other notable names include SMBC Nikko Securities Inc., National Investment Corporation of National Bank of Kazakhstan, Standard Chartered Bank, and major participants from Taiwan.”
One glaring absence from the second fund is of the governments of Saudi Arabia and Abu Dhabi which between them contributed 60 percent into the first Vision Fund.
SoftBank said that discussions with both of them were still underway said Daisuke Sawatake. It’s not clear whether SoftBank or Saudi Arabia pushed for the country’s decreased role in the second fund.
Saudi Arabia and Crown Prince Mohammed bin Salman came under fire last year after the murder of journalist Jamal Khashoggi in a Saudi consulate in Istanbul.
While Saudi officials have said the killing was carried out by rogue agents and have denied that the prince had any knowledge of their plan, U.S. politicians continue to press for further action in the case.
The structure and management of Vision Fund 2 are likely to mirror the first Vision Fund, there appears to be a further tilt towards participants holding preferred debt, rather than equity.
In the first fund, SoftBank was the only pure equity investor, giving it greater upside but also greater downside, while most other participants had a split of debt and equity.
The strategy of SoftBank is pretty simple and straight forward, first the company used the Vision Fund 1 to make aggressive billion-dollar investments into technologies companies.
SoftBank invested heavily in companies like Uber, DoorDash, WeWork, GetYourGuide, Brain Corp, Plenty, Nvidia, Boston Dynamics, SoFi, Arm, OneWeb and many more.
The company also invested in India’s leading startups like grocery delivery startup Grofers, payments firm Paytm and budget lodging startup Oyo and online shopping website Flipkart.
SoftBank in June disclosed the first Vision Fund had earned 62% returns after investing $64.2 billion in 71 deals.
SoftBank, known for consistently cutting checks of $100 million and larger, and has invested in 24 of 377 unicorns globally (companies with a valuation of $1 billion or more), according to research firm CB Insights.
After Vision Find 1’s success with Vision Fund 2, the company is looking forward to making those profits even bigger. The second Vision Fund could help SoftBank extend its position as the most influential investor globally.
The SoftBank Vision Fund, run out of an office in London’s exclusive Mayfair neighborhood, is led by Son and Rajeev Misra, a banker who previously worked at UBS, Deutsche Bank, and Merrill Lynch.
Masayoshi Son uses artificial intelligence (AI) as a catch-all term to characterize SoftBank’s investment portfolio, which features businesses as varied as ride-hailing and autonomous driving, insurance, and healthcare.
Son is aiming to raise a new massive fund every two or three years to take advantage of opportunities he sees in cutting-edge technologies such as artificial intelligence and autonomous driving.
“I wasn’t sure it would be possible to raise $100 billion without Saudi money, but it looks like it is,” said Chris Lane, an analyst with Sanford C. Bernstein & Co. “I think it was a conscious decision by SoftBank to decrease the influence of the Saudis.”
SoftBank has not provided concrete details on the kind of AI-based investments it is targeting, said a senior executive at one Japanese bank listed as a participant in the new fund.
“The fund itself is, of course, attractive, but what matters is the overall balance of the portfolio,” the banker said, declining to be identified further.