SoftBank’s Son defends Vision Fund investments at Saudi conference

SoftBank Group CEO Masayoshi Son speaks at Future Investment Initiative 2019. Photo: Future Investment Initiative

SoftBank Group CEO Masayoshi Son on Wednesday defended his strategy of placing long-term bets on artificial intelligence, after U.S. office-sharing startup WeWork’s aborted IPO stirred doubts about his $100 billion Vision Fund.

“We identify the entrepreneurs who have the greatest vision to solve the unsolvable,” Son told a business conference in the Saudi capital of Riyadh. “They need to have [the] strongest passion. And then we provide the cash to fight.”

The comments were his first in public since WeWork, one of his prime investment targets, canceled its listing in late September. The startup received an icy reception from investors who were skeptical of mounting losses and its governance structure.

Son was speaking at the Future Investment Initiative, organized by Saudi Arabia’s sovereign wealth fund, the Public Investment Fund. He appears eager to shore up support from the Saudis: The PIF is the largest investor in the original Vision Fund but has not yet backed a second fund SoftBank announced in July.

The tycoon presented his case for pouring more money into AI, saying the field is on the cusp of tremendous advances. Right now, he said that AI handles only 10% of “subjects” or tasks better than humans, but that in the next 30 years the ratio will surge to around 90%.

“The power of computing, the size of memory, communication speed — those are the three fundamental things [that have] improved by 1 million times” in the last three decades. He said he expects another million-fold improvement over the coming 30 years.

He showed no signs of backing down from his investment approach, stressing: “We focus on investing in unicorns. Those are number ones in each of the categories.”

Rajeev Misra, CEO of SoftBank Investment Advisors who oversees the Vision Fund, said the second iteration of the vehicle will invest in 100 companies.

“We have 86 companies in our portfolio in fund one, with another 100 in fund two,” Misra said at the same conference. “So those 186 companies interacting with each other and doing business with each other will be immense.”

The Vision Fund’s massive investments in late-stage tech companies, which have driven their valuations ever higher, have drawn increased scrutiny following the WeWork fiasco. SoftBank and the Vision Fund have pumped over $18 billion into WeWork, including a $9.5 billion bailout. Some of the original investment came at a $47 billion valuation that has since been slashed.

Son insisted that the Vision Fund does much more than just provide cash, emphasizing its role in facilitating partnerships across its more than 80 portfolio companies. “Of course we provide the growth capital, but that money is available from any other source. We are providing the total stimulus for them to grow much bigger, quicker.”

Son’s decision to attend the PIF event stood in contrast to many global executives, who have stayed away from the kingdom after last year’s murder of Saudi journalist Jamal Khashoggi in the Saudi consulate in Istanbul. Son himself canceled a speech at the forum last year but decided to return this year, signaling his intention to maintain relations with Riyadh.

Additional reporting by Alex Fang in New York.

This article was first published on the Nikkei Asian Review

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.