By Brad Stone
As you’ve probably heard, Masayoshi Son, the cunning founder of SoftBank, announced last fall he was raising a $100 billion Vision Fund to back a broad set of transformative companies in artificial intelligence, robotics and other sectors. In Silicon Valley, the news is still resonating. Venture capitalists invested only $79 billion into startups in all of 2015 and were on track to do about the same in 2016. So Son is bringing a bazooka to a gun fight, and the effects will likely be felt here over the next few years.
Now we’re starting to learn a little bit more about Son’s backers in this effort, thanks largely to some of my colleagues. Foxconn, Oracle’s Larry Ellison, Apple and Qualcomm are each making investments in the fund. But most of the capital so far is coming from the Middle East, as well as from SoftBank itself. Mubadala Development, a state-owned wealth fund in Abu Dhabi, is putting in $15 billion, we learned last week, while the Saudi Arabia Public Investment Fund, at the behest of Deputy Crown Prince Mohammed bin Salman, son of the country’s king, is contributing $45 billion.
Most venture capital funds don’t take money from the Middle East, preferring more consistent capital from sources like university endowments. But the sovereign wealth funds have said they want to diversify economically from fossil fuels and capitalize on the incipient tech wave. Enter Masa — the expedient investor.
As one venture capitalist told me last week, Masa is, above all else, opportunistic and strategic.
While we don’t yet know how Masa will put this cash pile to use, its existence tells us a lot about an already legendary figure. As one venture capitalist told me last week, Masa is, above all else, opportunistic and strategic.
He’s opportunistically tapping the Middle East while also headquartering his fund in London, likely for regulatory and tax reasons, and he’s raised the entire fund off SoftBank’s own balance sheet, which is already loaded with debt from the acquisitions of Sprint and ARM. He couldn’t have imagined Donald Trump would win the election, but when it happened, Son was one of the first tech execs to Trump Tower, dangling a somewhat flimsy promise that the Vision Fund would bring 50,000 jobs to America. This, by the way, is a remarkable sign of personal growth for a man who once threatened to light himself on fire if he didn’t get his way with Japanese regulators.
Masa is also making a strategic bet on continued innovations in AI, robotics and the internet of things, and on what he likely sees as an erratic stock market that will yield discounts on old-line companies that need a technology boost in these fields.
This is a remarkable sign of personal growth for a man who once threatened to light himself on fire if he didn’t get his way with Japanese regulators.
Masa has often played these moments correctly, with a few setbacks along the way. He started his career selling a translation device to Sharp, then took that haul and each of his subsequent fortunes and placed new bets on technologies like broadband, e-commerce and mobile phones. The main thing he regrets in life, he said during SoftBank’s Nov. 7 earning call, is being too cautious during his career. “What I’m regretting is that I was too conservative, or I was too small — [I was thinking small when] there are things like paradigm shifts going on.” This was by way of introducing himself at the start of the call.
So now Silicon Valley has to deal with an emboldened Masa ready to be “the Warren Buffet of the tech industry,” as he calls himself. This, along with so many other factors, is likely to warp the reality of Silicon Valley in 2017 and beyond. It will be fun to watch.
This originally appeared in Bloomberg Technology’s newsletter Fully Charged. Sign up here.
