Inside Masayoshi Son’s secret meetings with the founders he picks for his $100 billion Vision Fund

The Vision Fund has spooked many other VC firms, who are concerned $100 billion will spike valuations for tech companies and lead to another dot-com bubble. It’s pushed funds to raise more money to compete for start-ups alongside SoftBank.

“The challenge is there’s too much money at all stages,” said Jeff Clavier, founder and managing partner of the venture firm Uncork Capital. “We don’t have enough IPOs and exits in comparison to the dollars being invested. The whole increase of holding time and delaying of exits is really a bummer, because we need even more IPOs to return cash to limited partners.”

On the plus side for the venture community, it’s also become another exit option for VCs looking to liquidate, such as Benchmark’s Uber sale to the Vision Fund earlier this year.

No other VC firm is pushing the narrative of frictionless partnership between portfolio companies (and with SoftBank itself) like Son, said Izhikevich. Theoretically, it’s a win-win for Son and his investments — portfolio companies can pick up customers and partners, and Son can reap the benefits as all of his companies flourish. He can also weed out investments based not only on performance but also on fit with the other companies in the broader portfolio.

This view of cooperation within business is derivative from the Japanese concept of keiretsu, where corporations own stakes in each other’s companies to help with long-term planning. There are signs Son is building a keiretsu on his own. He has already pushed several of his investments together, such as Uber taking a 27.5 percent stake in Grab.

Keiretsu can have an ugly side. It can lead to price-fixing and the stifling of competition.

It can also limit a company’s growth. Competitors to companies in the Vision Fund family could view Son’s investments as working in tandem. Japanese auto suppliers, who counted Toyota as partial owners, ran into this problem when Toyota rivals wouldn’t buy from them. It’s possible taking money from the Vision Fund could isolate certain companies from future customers if they’re seen as favoring rivals within the Son sphere.

Son originally thought the Vision Fund would be pursuing full takeovers but changed its strategy on the fly to avoid potential regulatory pitfalls, as U.S. agencies are far more likely to strike down acquisitions than minority investments. (Son did meet with President Trump in late 2016 and again in June in what some view as a tactic to befriend the administration. He will get his first regulatory question answered when Sprint’s merger with T-Mobile is approved or denied).

Keiretsu can also link the fates of many companies together, leading to big swings in valuation. That’s a major concern for a late stage investor like the Vision Fund that’s investing at a scale that’s never been seen before, said Lise Buyer, founder of Class V Group, a consulting firm that helps companies that are headed for the public markets.

“Underfunding is a problem, but overfunding is a problem too,” said Buyer. “Companies that have too much money too soon often develop sloppy habits that come back to bite them years later when the money faucet runs dry. Valuations are going up more rapidly that what we’ve seen in the past. That makes a lot of these investments more speculative.”

And while Son’s Vision Fund strategy appears novel, this isn’t the first time technology-focused VC firms have evoked kereitsu. Kleiner Perkins talked of it on its website back in 2000 — right around the time the last technology bubble burst.

If a second storm does come, Son will be in the unique position of losing nearly all of his wealth twice. But if it doesn’t come, Son could become more than a kingmaker — he may become Silicon Valley’s king.

—CNBC’s Ari Levy contributed to this report.

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