Masa Madness

Self-Markups. In order to show gains on its investments, SoftBank invested in follow-on rounds at higher valuations. Since no one else was willing to pay what they were, they were artificially setting prices higher than the private, and eventually public, markets were willing to bear.

Aggressive Overbids. The Vision Fund is notorious for offering companies multiples more money at higher valuations than they were planning on raising and threatening to invest in competitors instead if they said no. If a company set out to raise $250 million, Masa asked them what they’d do if they had a billion. This elbowed out other investors and... See more

Many of the Vision Fund’s investments were simply bad investments, and many were good companies fatally wounded by SoftBank’s money and attention.

Masa launched the Vision Fund with $28 billion of SoftBank’s own capital, $45 billion from the Saudis, $15 billion from the UAE’s fund, Mubadala, and $1-3 billion each from Apple, Qualcomm, Sharp, Foxconn, and Larry Ellison’s family office.

The fund is unique not only for its size, but for its term as well. Whereas most venture funds have a 5-10 year time horizon, the Vision Fund has a 12 year time horizon with a two year extension.

SoftBank brashly poured billions of dollars into “tech-enabled businesses” with large CapEx requirements, like WeWork and a dog walking company, Wag, and pushed them to grow fast. That’s how we found ourselves in the situation we did at Breather, faced with a competitor that pursued growth to the exclusion of unit economics.

If you’re familiar with SoftBank, it’s probably because of the Vision Fund. It’s the most ambitious and controversial venture capital fund ever raised, and it massively distorted the private startup market. After nearly two decades operating, Masa was ready to get back to investing.

Because SoftBank is so nakedly ambitious and takes such big swings, it’s extremely polarizing. Most recently, SoftBank’s Vision Fund went from “This is going to change the world” to “They’re ruining venture capital” to “See! This guy is an idiot” in the blink of an eye. As a result, there’s not a lot of nuance in the conversation around the company... See more