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By Jason D. Rowley · Sep 10, 2021
Investor Spotlight: SoftBank Vision Fund's Investments In Commerce & Hospitality
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In SPEEDA Edge’s Investor Spotlight series, we put venture investors under the microscope to examine and evaluate firms’ investment activity across each vertical on our platform. We also highlight aspects of each firm which contribute to its success.
For the first Investor Spotlight, SPEEDA Edge is going big. There is no larger pool of capital than that of SoftBank Vision Fund (SBVF). Deploying over USD 100 billion so far and with tens of billions of dollars in dry powder yet to invest, SoftBank Vision Fund I and Fund II changed the world of growth-stage technology investing.
In this report, we examine SoftBank Vision Fund’s investments in the Commerce & Hospitality sector and explain how its massive fund size sets SBVF apart from every other investor in the market today.
SoftBank Vision Fund’s Investments in Commerce & Hospitality
Commerce & Hospitality is an expansive sector with trillions of dollars in market opportunities. Spanning from logistics and factory automation to the future of retail, food service, and real estate, the number of market niches for companies to fill seems almost limitless.
It’s for this reason that companies in the commerce and hospitality sector make up the largest proportion of the SoftBank Vision Fund’s portfolio.
SPEEDA Edge categorized the companies listed on the portfolio page of the Vision Fund’s website, and as of late August 2021, roughly one third of the firm’s combined portfolio falls into the commerce and hospitality sector.
Key themes
The SoftBank Vision Fund’s investments in Commerce & Hospitality generally fall into one of the following themes:
- Online shopping. The internet is eating brick-and-mortar commerce, and the SoftBank Vision Fund is bankrolling venture appetite for the space. South Korea-based Coupang is one of SBVF’s biggest wins to date; the firm led a USD 2 billion round in November 2018, and SoftBank Group Corp. first invested in Coupang back in 2015. Combined, SBVF and its corporate parent own 33% of the ecommerce company. The November 2018 deal valued Coupang at USD 9 billion, post-money. Coupang went public in March 2021, valuing that 33% equity stake at around USD 28 billion.
- Delivery. The SoftBank Vision Fund invests in a lot of delivery companies: food delivery, ecommerce delivery, grocery delivery, India-based Delhivery. It runs the gamut. Some of SBVF’s best-performing investments in the sector include restaurant delivery app DoorDash, mobile app-based virtual bodega GoPuff, and the aforementioned Delhivery.
- Logistics. SoftBank Vision Fund I and II have invested in several logistics companies including the likes of Bogota-based Rappi, Sao Paulo-based Loggi, and Beijing-based JD Logistics. The firm has also backed a number of companies in the trucking technology industry, including load aggregator Flock Freight. One of SBFV’s leading investments in the logistics industry is digital freight forwarder and customs brokerage platform Flexport.
- Transportation. Some of the SoftBank Vision Fund’s biggest bets have been in the on-demand transportation sector. For example, SBVF poured billions of dollars into Uber and was the company’s largest shareholder at the time of its IPO. (The firm sold off 45 million Uber shares, about one third of its stake, this past July.) Other bets in ride-hailing include Grab, DiDi, Ola, and TIER Mobility. SBVF has also invested in a number of vehicle marketplace operators, including peer-to-peer car rental platform Getaround and used car leasing platform Fair.
- Food service. Suffice it to say that the SoftBank Vision Fund is no stranger to getting its slice of the pie when investing in food service and restaurant tech. One of its most perplexing investments was Zume, which originally set out to build robotic pizza kitchens directly into the back of delivery trucks. The idea of giving consumers the ability to get hot, fresh pizza with the tap of a mobile app button sounds good on paper, but it’s kind of cheeesy in practice. Zume has since pivoted from pizza robots to sustainable takeout food packaging. On a more serious note, however, it’s worth mentioning that SBVF is also a backer of cloud kitchen and back-of-house restaurant management tech companies like Kitopi and Ordermark.
Portfolio companies in Commerce & Hospitality
Here is an index of SoftBank Vision Fund’s portfolio companies in the commerce and hospitality sector, sourced from the portfolio page of the Vision Fund website.
SBVF’s Size Puts It In A League Of Its Own
Launched in 2017, its roughly USD 100 billion Vision Fund, managed by corporate subsidiary SoftBank Investment Advisors, remains the largest single pool of capital raised with the objective of investing exclusively in high-growth technology ventures.
SoftBank announced the launch of Vision Fund 2 in July 2019; SoftBank Group Corp. committed to invest USD 38 billion in the new investment vehicle, and SBG founder and chief executive Masayoshi Son (alongside other management) has an option to invest up to USD 2.6 billion for up to a 17% stake in the fund, according to disclosures made in Q2 2021 earnings reports. Although the 2019 announcement claimed that SoftBank Investment Advisors had secured USD 108 billion in commitments for the new fund, outside capital is yet to materialize, perhaps due to large and very public losses incurred by flagship SBFV I portfolio companies like Uber and WeWork, which may have spooked would-be LPs like Apple, Foxconn Technologies, and Microsoft, all of whom reportedly signed memoranda of understanding to invest in Fund II. In other words, so far, SoftBank Group and its leadership are the sole backers of the new fund, and the ultimate size of SBVF II remains to be seen.
The impact of these huge funds has been significant. In its Q2 2021 earnings report, SoftBank Group said that its Vision Funds provided 10% of capital raised by unlisted AI companies worldwide. No other investor can say that because no other investor wields a similarly large sum of capital, and certainly not in any one fund.
The chart below shows just how outsized SoftBank Vision Funds I and II are relative to the largest-ever venture capital and private equity funds at least partially earmarked for technology growth investments. (Note that a handful of large, exclusively buyout-focused funds were excluded from this chart.)
The size of SoftBank Vision Funds I and II puts the investor in a league of its own. To put this in perspective, let’s look at some of its competition.
These days, one of the most active investors is Tiger Global Management, a firm that invests in both public and private markets with a focus on internet, technology, and financial services. So far in 2021, the firm has invested in over 200 startup funding rounds and seems to announce a new deal every day. It’s making a lot of money moves, to say the least. And while the firm’s assets under management totals are enough to make just about any other money manager green with envy, Tiger Global’s AUM pales in comparison to the SoftBank Vision Fund. Since 2017, when SBVF launched, Tiger Global Management has raised roughly USD 14.15 billion across three new venture capital funds, the most recent of which, Fund XIV, launched in April 2021 and netted USD 6.65 billion in LP commitments.
Sequoia Capital, one of the oldest venture capital firms, is similarly successful in raising money to invest in startups. But even this firm, named after the largest species of tree, is dwarfed by SBVF. Between the flagship firm in Silicon Valley and its international affiliates in China, India, Israel, and Hong Kong, Sequoia Capital has raised well over USD 20 billion for new venture capital funds since 2017, including its USD 8 billion Sequoia Capital Global Growth Fund III raised back in 2018. One of the largest, most established venture investors in the world—which has backed the likes of Apple, Google, LinkedIn, and Cisco back when those companies were just starting up—is still small potatoes relative to SoftBank’s Vision Funds. To put Sequoia Capital’s post-2017 fundraising track record into perspective, the more than USD 22 billion it raised since the launch of Vision Fund I is less than SoftBank Group Corp.’s own capital commitments to its funds. SoftBank Group Corp. invested USD 28 billion in Vision Fund I and is (for now) the sole limited partner in the roughly USD 40 billion Vision Fund II.
The sheer financial mass of SoftBank Vision Fund I, and now Fund II, changed the shape of the venture capital market, and it’s hard to imagine a new entrant capable of rivaling the breadth and depth of SBVF’s capital pool for the foreseeable future.
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