Masayoshi Son and Saudi Arabia launch a monster technology fund
“I HAVEN’T accomplished anything I can be proud of in my 60 years on Earth,” Masayoshi Son, the boss of SoftBank, a Japanese telecoms group, recently confided. Now he has enough money to make a dent in the universe: on May 20th SoftBank and Saudi Arabia’s Public Investment Fund (PIF), along with smaller investors including Apple and Sharp, launched the world’s largest technology-investment fund, worth nearly $100bn. How will Mr Son and his team deploy these riches?
He has a vision to match his vehicle. Within 30 years, he predicts, the world will be populated by billions of robots, many of them more intelligent than humans. Several of SoftBank’s recent acquisitions, most of which are expected to be part of the fund’s portfolio, should be seen in this light. ARM, a British chip firm acquired for a whopping $32bn last year, will design the brains for the robots. OneWeb, a satellite startup in which SoftBank acquired a 40% stake for $1bn in December, will connect them. Nvidia, another chip-design firm, in which SoftBank has bought a big stake, reportedly of $4bn, is meant to provide processors for artificial-intelligence services.
The fund’s investment team, which will eventually number 100, has another dozen deals in the pipeline. These will be followed by a further 40 or so, although not all of them will fit neatly into Mr Son’s vision (biotech investments will be considered, for instance). Deal sizes will range between $500m and $3bn, although another ARM-sized acquisition is a possibility, too. The fund has five years to invest its money and will run for a maximum of 14 years.
Making so many investments in the fast-moving tech world would be challenging in any circumstances. Another complexity is the influence likely to be exerted by the PIF, which has promised up to $45bn for the fund; Saudi Arabia seems to see it as a means to further its plans to diversify the economy (though insiders deny reports that the PIF has a veto right). Then there is Mr Son’s promise to Donald Trump to invest $50bn in America and create 50,000 jobs. Potential conflicts of interest have to be managed, too: SoftBank itself will invest $28bn in the fund, $8.2bn of that in the form of a stake in ARM, with the rest of ARM remaining in SoftBank’s hands.
Other tech investors look at the fund with a mix of scepticism and greed. Many think SoftBank lacks a successful record in tech investing, excluding an early stake in Alibaba, a Chinese internet giant. “You don’t get into investing with no real experience and want to deploy $100bn,” scoffs an executive at one of Silicon Valley’s most illustrious venture-capital firms. But Mr Son’s fund, which is bigger than all investments of American venture-capital firms in 2016 combined, could help solve their “unicorn” problem: how to unload profitably the many private tech startups worth more than $1bn.