SoftBank Vision Fund’s Investments in Financial Services

Key themes

• Capital as a service. Not so long ago, when a business needed money to grow and didn’t want to sell stock to venture capitalists, they had to go to a bank and fill out a lot of paperwork and provide a lot of documentation and then wait a long time for agreements to be drafted and money to be wired. That sounds like an inefficient way of doing things. A new generation of technology-enabled business lending companies are providing capital as a service to growing businesses, and SoftBank Vision Fund has a lot of exposure to this market niche. One of SBVF’s first deals was Kabbage, which the firm backed to the tune of USD 250 million in Series F funding announced in August 2017. (Kabbage later sold to American Express in August 2020.) Other portfolio companies in the CaaS space are working capital financiers C2FO, OakNorth, and Clearco.
• Buy now, pay later. The desire to get something today and pay for it later is one as old as commerce itself. Credit card companies capitalized on that by imposing high interest rates and unforgiving fee structures for late payments. But the “new new thing” in consumer purchase financing is Buy Now, Pay Later (BNPL) which enables a new generation of shoppers to pay for goods on installment plans, often with low or no fees or interest if payments are made in a timely manner. SPEEDA Edge projects that BNPL could be a multi-billion dollar market in just a few years. But for a market with so much room to grow, it’s almost surprising that the SoftBank Vision Fund has invested in just one BNPL company: Klarna. SoftBank Vision Fund led a USD 640 million investment round in June 2021, a deal which valued the Stockholm-based company at USD 45.6 billion, post-money. To put that valuation in perspective, Klarna is worth almost twice as much as U.S.-based Affirm, a publicly traded BNPL company co-founded by PayPal alumnus Max Levchin, which has a market capitalization of approximately USD 26.2 billion at the time of writing.
• Robo-advisory. Similar to BNPL, with all the money flowing into robo-advised stock investing platforms, one would imagine that SoftBank Vision Fund would have more exposure. The only robo-advisory company (currently) in the SBVF portfolio is Chicago-based M1 Finance, which in July 2021 closed USD 150 million in a Vision Fund-led Series E deal which valued the investment app company at USD 1.45 billion post-money. SPEEDA Edge projects that the robo-advised investment sector could reach USD 1.4 trillion in assets under management by 2025.
• Financial super-apps. The notion of “super-apps” might seem unfamiliar to people from the United States because such all-encompassing, do-it-all-in-one-place mobile applications aren’t the dominant design pattern in the American market. But look outside the U.S. and it’s easier to find examples. WeChat, which in China is used for everything from messaging and calls to online and in-person payments (and much more), is perhaps the canonical example, but other companies elsewhere are also developing super-apps of their own, and SoftBank’s Vision Funds are backing them. SBFV backed London-based financial super-app Revolut and India-focused Paytm. 
• Neo-insurance products. A lot of the bigger-ticket stuff we buy for ourselves is best viewed as an investment, of sorts. And there’s no better way to hedge one’s bet on something as big as a house or as small as a blender with some type of insurance. Software-enabled insurance and warranty brokers have cropped up over the past several years, and the SoftBank Vision Fund is there to back some of the fastest-growing companies in the sector, which is only set to expand. To that end, SPEEDA Edge projects that the market for neo insurance products will grow to roughly USD 66.6 billion by 2025. SBFV has invested in two neo insurance companies: Extend and PolicyBazaar. Extend is a pure-play extended warranty company in which SoftBank Vision Fund II invested  in May 2021; the SBVF-led USD 260 million Series C round valued Extend at USD 1.6 billion post-money on strong growth throughout the COVID-19 pandemic and into 2021. Another well performing SoftBank Vision Fund investment is PolicyBazaar, an insurance marketplace aimed at India. SBVF first invested in PolicyBazaar back in June 2018 and may have picked up follow-on capital in subsequent rounds of funding. PolicyBazaar filed for an initial public offering in August 2021, and SoftBank is reportedly looking to sell USD 250 million of its stake in PolicyBazaar.

Portfolio companies in Financial Services

Vision Fund’s Role As Value Growth Engine For SBG Expands