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By Jason D. Rowley · Sep 15, 2021
Investor Spotlight: SoftBank Vision Fund's Investments In Work
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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 the 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 Work sector, as well as map out SBVF’s most frequent co-investors, highlighting the firm’s connections to some of the deepest pockets in the world of venture finance.
About That Whole WeWork Thing
Let’s start by addressing the elephant in the room: the equally comical and calamitous caper that is WeWork, the New York-based commercial real estate subleasing company, founded by former baby clothing entrepreneur Adam Neumann, which typifies the waste and excess found in some lavishly funded startups. Headlines dishing on WeWork’s downfall and the ultimate comeuppance of its charismatic leader are too numerous to recount here, so allow a sketch of the situation:
- Briefly rebranded as “The We Company,” WeWork had burned through much of its USD 20.6 billion in cash, and without a lot of willingness from private investors to keep bankrolling the company it had little choice but to go public.
- WeWork’s S-1 filing revealed significant losses and an overall weak financial position, as well as several financial entanglements between Adam and Rebekah Neumann and the company, some of which were judged as improper by outside observers. For example, Adam Neumann cashed out USD 700 million via a sale of his WeWork stock prior to the IPO filing. The couple also leased the naming rights for the “The We Company” moniker to the company.
- Would-be public market investors, spotting other issues in the S-1, questioned WeWork’s USD 47 billion valuation in the face of significant losses. Morgan Stanley, originally the lead underwriter for the take-public transaction, withdrew from the IPO.
- WeWork considered slashing its valuation from USD 47 billion to USD 20 billion in September 2019, before ultimately opting to delay its IPO until at least mid-October. At this point, Neumann, who faced growing pressure by SoftBank founder Masayoshi Son and other investors, ultimately capitulated and stepped down. Former Time Warner Cable CFO Artie Minson, who’d operated as WeWork’s COO since mid-2015, and ex-Amazon executive Sebastian Gunnigham were named as interim co-CEOs and summarily called off the IPO.
- In October 2019, SoftBank Group agreed to spend roughly USD 10 billion to take over WeWork, a transaction which valued the company at USD 7 billion and broke out as follows: SoftBank Group agreed to accelerate a USD 1.5 billion investment into WeWork, opened up a new USD 3 billion secondary offering to buy back shares from existing investors and early employees while also opening a USD 5 billion debt facility. Sources told the New York Times that the takeover would only be successful if WeWork sells or goes public at a valuation of USD 15 billion or more.
And then came SARS-CoV-2, WeWork was kept alive, but barely. WeWork laid off thousands of employees in an effort to pare losses as most of the world shifted to working from home. WeWork lost USD 3.2 billion in 2020, according to details of an investor prospectus disclosed to Reuters and others. WeWork also exited 106 locations it had not yet opened or which were underperforming, and the company also made over 100 lease amendments, reducing its payment burden by about USD 4 billion.
In May 2020, as the SARS-CoV-2 virus spread around the world, SoftBank Group marked down WeWork’s valuation to USD 2.9 billion, a roughly 94% decline from its January 2019 valuation of USD 47 billion.
In March 2021, WeWork announced a definitive agreement to go public via a merger with BowX Acquisition Corp, a special-purpose acquisition company (SPAC). The deal valued WeWork at USD 9 billion, including debt, and would provide the company with a fresh USD 1.3 billion in cash, of which USD 800 million arrives via a private investment in public equity (PIPE) from Insight Partners, funds managed by Starwood Capital Group, Fidelity Management, and other investors. SoftBank Group also extended a USD 550 million credit facility.
Although, upon reflection, Masayoshi Son described his WeWork investment as “foolish,” it’s important to remember just how enthusiastic he and his investment team had been about the company and Neumann. Between commitments by SoftBank Group, the SoftBank Vision Fund, and its affiliates, USD 18.5 billion was committed to WeWork by Son and his affiliates as of October 2019, according to leaked statements by WeWork executive chairman Marcelo Claure. This risky—and some may say reckless—bet damaged SoftBank’s reputation as an investor, and may contribute to the challenges SoftBank Vision Fund II has since experienced raising from any LP outside of its corporate parent.
SoftBank Vision Fund’s Other Investments in Work
SPEEDA Edge’s Work sector is pretty expansive, encompassing fields ranging from security and sales technology to remote work and next-generation computing platforms. With hundreds of billions of dollars in market opportunities over the next few years, it’s no wonder that Work has been an area of focus for the SoftBank Vision Fund.
As of late August 2021, work-related startups make up approximately one-quarter of SBVF's portfolio, based on the companies listed on the portfolio page of the firm’s website.
Key themes
If in a gold rush it pays more to make pickaxes than swing them, then in a world moving toward more distributed and flexible forms of work it’s good to be in the business of building software, spaces, and computing infrastructure necessary for the future of getting things done.
Here are some of the key themes in SBVF’s Work investments:
- Big data-driven management tools. Especially in the case of knowledge work, employee productivity is increasingly managed with the help of software tools driven by big data. SBVF has invested in several companies in this sector. Based in London, New York, and Tokyo, Behavox is an enterprise SaaS company selling software to monitor and maintain compliance with corporate policies and government regulations. SoftBank Vision Fund 2 is the sole backer of a USD 100 million venture round, announced in February 2020. There’s also Whatfix, a sort of edtech corporate learning company, also in the enterprise SaaS space, focused on driving adoption of other SaaS products within enterprises. It all sounds very meta-level, but that didn’t stop SBVF from leading Whatfix’s June 2021 Series D round of USD 90 million at a USD 600 million post-money valuation.
- Work orchestration. In the modern enterprise, there are a lot of jobs to be done, and software can play a role in orchestrating that work. SBVF invests in companies like scheduling platform Skedulo, survey and customer satisfaction tracking platform company Qualtrics, OKR tracker tool Workboard, and robotic process automation company Automation Anywhere.
- Work marketplaces. Since the advent of capitalism, there’s always been a market for labor, but it’s not until recently that those marketplaces have been made so explicit and transactional. The SoftBank Vision Fund is an investor in at least two work marketplaces. First there’s Globality, which matches B2B service providers with enterprises in need of their services. SBVF led the company’s USD 100 million Series D round, announced in January 2019, and followed on its commitment by co-leading the company’s January 2021 Series E round alongside Sienna Capital. And then there’s Jobsandtalent, based in Madrid, which built a staffing marketplace for gig work; the company has raised over USD 507 million to date, of which USD 120 million came from SoftBank Vision Fund in March 2021 to help the company catalyze growth in the US market.
- Communications. Communication platforms may not be where all the work gets done, but they’re certainly where work is discussed. And with more folks working on distributed teams, these platforms play an increasingly integral part in the productivity stack. Take Slack for example. The popular work chat platform, purchased for USD 27.7 billion by Salesforce in June,, was backed by lead investor SBVF at a USD 5.1 billion post-money valuation in its Series G funding round, announced back in September 2017. SoftBank Vision Fund’s newest comms platform portco is mmhmm, launched by ex-Evernote founder Phil Libin in the early days of the pandemic. The video communication platform raised USD 100 million in a Series B funding round led by the SoftBank Vision Fund in July 2021.
SBVF’s investments in Work
This index of SBVF’s portfolio companies in the Work sector is sourced from the portfolio page of the Vision Fund’s website.
SBVF’s Syndicate Partners
Venture investing is a game of relationships played with money. Seldom is it the case that a single firm can financially support an entire phase of a startup’s development and growth. And with the size of deals the SBVF invests in, the firm needs to save seats at the table for others to participate.
In the venture capital deal-making process, lead investors play a number of important roles. They’re writing the largest check, so that level of exposure means that deal leads typically set the financial terms and orchestrate the due diligence process. They generally also receive a seat on the company’s board of directors, letting them manage their risk through governance and strategic leadership. Other participating investors are often just along for the ride. Collectively, deal leads and participants are called a “syndicate,” and they coordinate their efforts to execute the transaction.
SBVF is typically the lead investor on its deals. According to Crunchbase data, the Vision Fund has invested in 249 deals across all sectors—and led all but 45.
Using funding data from Crunchbase, SPEEDA Edge analyzed the SoftBank Vision Fund’s syndicate network. SBVF has joined over 1,300 different investors over the years, but it finds itself co-investing with some more often than others. The chart below shows the firm’s most frequent syndicate partners in its deals across all sectors, not just Work.
In certain respects, these findings are unsurprising. The SoftBank Vision Fund, the biggest pool of money in the tech investment world, typically co-invests alongside similarly major players like Sequoia Capital, Lightspeed Venture Partners, New Enterprise Associates, and others.
But the SBVF isn’t just another major player. Due to its massive size, the SoftBank Vision Fund is in the same league as nation states when it comes to strategic investmenting in technologies. Some of its most frequent syndicate partners are sovereign wealth funds—such as Singapore’s GIC and Temasek, and Qatar’s sovereign wealth fund—as well as pension funds like the Canada Pension Plan Investment Board.
The universe of investors capable of deploying capital at the scale of SBFV is fairly small, so it’s unlikely that the composition of SoftBank’s syndicate partner network will change all that much going forward.
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