SoftBank’s second Vision Fund accelerates the pace of investment

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

During the first three months of the year, the fund invested less than $ 2 billion in less than two dozen companies, according to public disclosures. Many of his latest investments had not even been publicly announced, one of the people said.

SoftBank’s increase in spending comes when other deep-pocket investors like Tiger Global Management have pumped money into stocks. start-ups, Contributing to the first half the most active for the financing of private technology.

The first $ 100 billion Vision Fund became known for participating in $ 1 trillion in companies such as the Chinese ride-hailing app Didi Chuxing and the flexible WeWork working group, sustaining heavy losses while beating competitors in large markets.

Its returns were boosted recently after several companies in which it had invested reached the public market, including the South Korean trading group Coupang and the US food delivery company DoorDash.

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

The first Vision Fund needed to invest at least $ 100 million per deal under an agreement with its investors, said one person was informed on the matter, limiting its ability to make investments in companies relatively young people.

SoftBank, led by chief executive Masayoshi Son, has invested $ 30 billion of its capital in the new fund after failing to raise capital from external financiers, such as government funds in Abu Dhabi and Saudi Arabia.

Deep Nishar, senior management partner of the Vision Fund in the United States, said the second Vision Fund had begun to “associate in early stages of the company’s life” in an attempt to find attractive investments.

“In the current market environment, valuations are more attractive in the early stages of a company’s life cycle compared to the very late stage,” Nishar said.

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

In other start-ups, such as celebrity video messaging app Cameo, the second Vision Fund has taken a back seat to capitalist rivals, investing tens of millions of dollars instead of hundreds of millions in return.

SoftBank does not expect to raise money from external investors for the second Vision Fund, although it could invest more of its capital, said one person who is familiar with the matter. The company originally said it would raise as much as $ 108 billion for the fund.

Vision Fund executives have sought to minimize this WeWork and other high-profile contrasts from the very first fund, announcing a new focus on start-ups using artificial intelligence.

The new fund had invested about $ 20 billion in more than 90 start-ups and had planned investments in at least 30 additional companies, two people told reporters. In comparison, the first Vision Fund invested $ 85.7 billion in less than 100 companies.

“There is a reduction in the number of companies that are formed that require a lot of capital to be able to start,” Nishar said.

SoftBank has not always been successful in investing in smaller companies. The start-up of Brandless consumer goods and Wag dog walking app both had problems after receiving large investments from the first Vision Fund.

The second Vision Fund has not completely escaped the big bets. In May, the fund led a $ 775 million investment in Perch, one of several well-funded groups that will consolidate Amazon’s independent traders.

Several partners and other high-ranking executives have recently left the team that manages both Vision Funds, including Ervin Tu, a partner who oversaw investments in ByteDance and the Uber company. Jeffrey Housenbold, who has made many of the largest consumer investments in the United States, left earlier this year.

SoftBank said it had added 30 people to the investment team in the last four months. In February, the fund hired Microsoft executive Nagraj Kashyap as a management partner to lead investments in consumer companies.

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