
SoftBank is still writing big checks - elsewhen
https://pitchbook.com/news/articles/softbank-is-still-writing-big-checkseven-after-the-wework-debacle
======
RcouF1uZ4gsC
This almost seems like the plot of the James Bond story Casino Royale.

Basically, SoftBank has taken the money of some very unsavory characters
(people who are literally willing to cut your body into little pieces)
promising big gains and has lost a significant chunk of it.

Now, like Le Chiffre, they are desperately trying to gamble big, hoping that
they can make up the lost money by high risk strategies.

~~~
elfexec
> Basically, SoftBank has taken the money of some very unsavory characters
> (people who are literally willing to cut your body into little pieces)
> promising big gain

So has pretty much every major company and every major industry around the
world. The saudis are some of the largest investors in pretty much everything
- including the tech world.

> and has lost a significant chunk of it.

They haven't lost anything yet. They have made investments. Whether it pans
out will take time. Even WeWork is still an investment. And last I heard,
their first vision fund actually grew in value rather than declined.

> hoping that they can make up the lost money by high risk strategies.

It is the world's largest venture capital fund. The entire fund exists to
invest in high risk companies. What are you talking about?

The fact that you think "This almost seems like the plot of the James Bond
story Casino Royale." should tell you your assumptions and conclusions might
require re-evaluating.

If what you said was true, softbank wouldn't have been able to create a second
vision fund.

[https://group.softbank/en/corp/news/press/sb/2019/20190726_0...](https://group.softbank/en/corp/news/press/sb/2019/20190726_01/)

Instead of parroting news ( which hypes clickbait nonsense about things they
don't understand ) and then mixing that with hollywood fantasy, why not look
at the data, facts and what is really happening.

~~~
greglindahl
> They haven't lost anything yet.

They led a WeWork down round and have realized a loss on their previous WeWork
investment. They also realized a loss with Uber, a public company.

------
Traster
The obvious point is that the 'writing big checks' aligns with what detractors
have starting pointing is the problem with Softbank. Take the first example
given in the article, Paytm - Softbank are already investors in Paytm, so by
inflating a new round of funding they can mark up their previous investment as
a profit. Not to mention all weird crossed up fact that Softbank were an
investor in Alibaba who are the largest share holder of Paytm. It's all a bit
like marking your own homework.

------
bitL
I am sorry, what is the problem here? Their Vision Fund is for funding risky
ventures with the hope one unicorn pays off the cost of all the others and
more. Of course they won't stop. The WeWork exercise might have been about
testing the waters of hacking people's perception instead of fundamental
analysis and they were riding high for quite a while, so it almost worked for
them.

~~~
paxys
WeWork "almost worked" the same way every large bubble or ponzi scheme almost
works if you don't count the last day when everything inevitably comes
crashing down.

~~~
bitL
I think it was ultimately an exercise to see if people are lazy enough to pay
for convenience and brand. It almost worked for them which says a lot about
the state of society. One could argue Uber's business model is not that
different either...

~~~
empath75
It wasn’t even close to working as a business. They lost a fortune and had no
path to profitability. It almost worked as a way of extracting dumb money from
retail investors.

~~~
lotsofpulp
How did it almost work at extracting dumb money from retail investors? It
didn’t even get close to an IPO. They paid a bunch of banks to have some
meetings, but as soon as the numbers were disclosed, no one seems to have been
fooled.

------
0zymandias
The lesson for any potential employee is to stay far away from any company
funded by SoftBank.

The inflated value may help the CEO get a big payout (like WeWork) or help the
company raise lots of capital (like Uber & Paytm).

However, you are probably joining a company with an unrealistic valuation like
Uber, WeWork, Wag or Paytm. If you have options, you will always be
underwater. If you have RSUs, they may never appreciate.

------
LatteLazy
Softbank is not trying to be your local Savings and Loan. They want to be
something entirely different. Maybe that's a good idea, maybe it's a bad idea.
But they intend to find out.

So why does anyone think they will throw in the towel so long as they have
even 1 backer or yen left?!

~~~
KorematsuFred
Not to mention it is their money. Spending it on lofty ideas is better than
spending it on lobbying for a war.

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Havoc
They'll make it work.

Worked with the SB guys briefly and my take on it was that they're willing to
stack the chips higher than anyone else. And if gravity gets in the way
they'll keep stacking until gravity no longer applies

Despite the mockery and we work drama I reckon their all or nothing strategy
is sound. If this project fails it'll probably be concurrent with a SV
collapse in which case does it even matter?

If you're gonna take risks that involve catastrophic failure anyway you might
as well bet big on upside

~~~
Traster
> If this project fails it'll probably be concurrent with a SV collapse in
> which case does it even matter?

If I invest $100 in MSFT and you invest your entire life savings in MSFT when
the share price goes down it kind of does matter.

>If you're gonna take risks that involve catastrophic failure anyway you might
as well bet big on upside

Or, to put it more reasonably, if you're going to take high risk opportunities
do it with a chunk of investment you're able to lose, don't risk your entire
company on it - which Softbank seem to do. Does it not concern you that
Softbank almost managed to bring their entire business into jeopary because of
a single failed investment?

~~~
Havoc
>If I invest $100 in MSFT and you invest your entire life saving

Thats missing the point I'm trying to convey. Try this analogy:

If you owe the back 100 Mil you've got a problem. If you owe the bank a 100
billion the bank has a problem.

The rules shift if you up the stakes enough. Return, time frames, values etc
start becoming malleable concepts. You think it's a coincidence that masa
talks about 300 year time frames?

Not convinced this will work. But I am convinced he's a step ahead of everyone
else in rolling this dice. And if it does work it'll crush everyone else.

>Or, to put it more reasonably

Nothing about this is reasonable. That's why it could work

~~~
JumpCrisscross
> _If you owe the back [_ sic _] 100 Mil you 've got a problem. If you owe the
> bank a 100 billion the bank has a problem._

SoftBank is big, but not big enough to threaten the solvency of the Gulf
states. Nobody has an incentive to bail out the Vision Fund apart from Masa.
He’s already raiding SoftBank's balance sheet.

The reason the bank line works is banks are highly leveraged. A small hole
blows the stack. That gives the $10bn borrower leverage over the trillion-
dollar bank. Not so with the Vision Fund, where the prime LPs are lending out
of equity and the employees are the ones leveraged.

------
nl
If you view SoftBank as a way for Saudi oil money to move out of the country
and into public markets at a ~30% discount it takes on a whole new
perspective.

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alex34343
These people are very clever scammers, I started out with an "Oscar Ford"
telling that my initial investment of $US250 will be matched by him. Less than
one week later after he had manipulated the figures in my account to look like
i'm winning he said that if i put in $5000 i will get a contract to the effect
of being 30% insured, and because he never looses and invests in small amounts
my $5000 will be safe. Plus i could withdraw that money at any time I choose
with no issues. A few days later after he had my account reflecting a further
$10,000 in winnings, I was encouraged to put another $5000 towards anther
investment. This time my money is 100% insured and again i could withdraw at
any time. My account got to around $26,000 in about 2 weeks and i needed to
withdraw as we had agreed that I needed the $10,000 at a particular date. At
this time i stopped hearing from him because he had tried to convince me that
making a withdrawal takes away the benefit of insurance etc. I insisted
because i needed the money. My account went up again to over $30,000. I
started to contact support in order to make my withdrawal. After a while they
became very rude, the person i was trying to plead with to give Oscar my
message told me that i was giving him attitude. then as i continued to call,
Mr Oscar Ford called me back to say he had just came out of an i think 9 hrs
meeting and was fired because he had lost a client's $3000,000. It was a total
made up story and I knew it. Before the conversation, my account was over
$30,000. By the end of the conversation when i checked again it was suddenly
down to $1.00. This is a well laid out scam of a company and my hope here is
to help others to not be caught up in their lies like I did.thanks to
globalrefundsint dot com for the total recovery of my asset. When you ask to
withdraw then they will make you fill out forms confirming that you give them
the money hence there is no argument.

------
yanilkr
Lookup “central bank credit guidance”.

Japanese central bankers figured out a way of creating money for purposes that
are good for society. Like AI, Quantum computing or bio technology and any
other hyped up stuff you see on internet.

There were many bad consequences in the past because of money created that
way.

With the way SoftBank is giving away money, it looks like “smart credit
guidance” is still happening with out any public policy or public awareness.

------
zepearl
> _The Vision Fund reported an operating loss of $8.9 billion in October
> related to WeWork and Uber. The losses are especially concerning because of
> the financial structure of the fund, 40% of which takes the form of
> preferred stock that promises investors 7% per year. That interest works out
> to as much as $2.8 billion annually._

I'm not a believer of the Vision Fund (but it's just a subjective opinion -
I'm a pessimist).

> _When SoftBank announced that it expected to raise more than $100 billion
> for Vision Fund 2 in July, the firm touted corporate backers Microsoft,
> Amazon, Foxconn and several financial institutions. But it only mentioned
> one sovereign wealth fund, from the government of Kazakhstan, which has
> roughly $60 billion in assets - a far cry from the hundreds of billions
> controlled by PIF and Mubadala._

I watched a few documentaries about Kazakhstan last year (for no particular
reason - I was just randomly watching TV) and (technically) it seems to be a
nice country which has a nice mix of many climates (deserts, mountains, plains
-
[https://en.wikipedia.org/wiki/Kazakhstan](https://en.wikipedia.org/wiki/Kazakhstan)
) and has as well many natural resources (oil, gas, uranium, metals) and is
currently trying very hard to develop.

I remember that at that time I mentally wished them well, but when I read now
about their involvement in the Vision Fund I immediately thought "hopefully
they didn't bet too much on it"... .

~~~
zozbot234
> I remember that at that time I mentally wished them well, but when I read
> now about their involvement in the Vision Fund I immediately thought
> "hopefully they didn't bet too much on it"...

Strange choice indeed. Makes you wonder if Borat Sagdiyev was involved
somehow.

~~~
puranjay
Borat wouldn't be able to recognize the Kazakhstan of today. I went on a mini
tour of the "Stans", covering Kazakhstan and Uzbekistan. Chinese money has
radically transformed Kazakhstan. Their per capita GDP is nearly the same as
China and the capital city has world class infrastructure now.

~~~
zepearl
I hope that as well the rest of the country (not only the capital) got/will
get some benefits (e.g. infrastructure, government not totally focused only on
the capital, etc...)?

> _Chinese money has radically transformed Kazakhstan_

Was it financed (at least partially) by Cina? I don't remember "Cina" being
mentioned in the docs I saw (they were more focused on the nature and/or the
people living there being kind-of-ex-russians and/or the resources and/or
about the regime).

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alamaslah
Cheques.

Although, they should be writing checks into the operations of WeWork.

Edit: Oh, Saudi Arabia and UAE sovereign wealth funds have checked out of the
next fund.

~~~
Skunkleton
Cheques is British English and checks is American English.

~~~
alamaslah
The Vision Fund is in London. Are they the ones writing the cheques? :)

~~~
ibero
The headline for the article is written by an American publication and
American based author.

~~~
alamaslah
By the way...This publication is owned by Morningstar inc. Guess you invested
in Morningstar inc. during the dotcom bubble?

Softbank. $91million for 20%

