|SoftBank’s $93 billion Vision Fund is the biggest of all time — and it’s not even close|
Its size could also be a liability.
by Rani Molla @ranimolla
Sep 21, 2017, 2:00pm EDT
Photo by Kiyoshi Ota/Getty Images
SoftBank’s Vision Fund is a beast like no other. Backed by sovereign wealth funds and tech behemoths alike, it’s not just the largest tech fund ever — it’s the largest corporate venture capital fund ever, according to data from FactSet. It towers over what were formerly the biggest of these funds, raised by such names as Goldman Sachs and Blackstone.
And even more terrifying to Silicon Valley venture capital firms, SoftBank’s fund is focused on tech startups. Typical funds from Sand Hill firms barely register on the same scale as SoftBank’s $93 billion Vision Fund — VC funds usually top out in the millions or at most one-digit billions.
Here’s how it compares in size to the biggest funds historically, as well as to some major tech funds:
The size of SoftBank's fund has both intimidated and befuddled competing investors, who expect that the giant will have to cut massive, rapid deals in order to put the cash to work effectively, according to sources. Some worry that the pool will further inflate already overly high valuations of private tech companies. But other shareholders see it as an opportunity to sell their stakes earlier in companies that are taking longer and longer to deliver real cash.
But perhaps the relatively smaller size of Sand Hill’s venture capital funds is a blessing. SoftBank will have to allocate approximately $20 billion a year to dispense with its intended $100 billion fund in its five-year time frame. Smaller firms will likely have to be choosier about their investments.
For example, Benchmark’s fund that invested in Uber in 2011, when the company was worth only $60 million, raised $425 million for its entire fund — an amount smaller than single deals by SoftBank. Uber is now worth more than 1,000 times what it was during its series A funding. Funding later-stage investments or buyouts like SoftBank is doing is much more expensive, but won’t likely yield returns like that.
Theodore Schleifer contributed reporting.