Anyone think that SoftBank seems to be investing a dangerously large amount of money in these startups, which could be a big risk if there's multiple failures? Or is it all good if it's private money?
Arm Holdings is held fully by SoftBank and the Vision Fund, should they fail, i am not sure what would happen but my guess is Arm would get out of the tumble relatively unscathed, it's too valuable.
Masayoshi Son ( founder of SoftBank ) is legendary for betting big and winning big and also betting big and losing big.
During the dotcom boom, he became the richest man in the world for a few days by betting big and then during the crash, he lost almost all of his net worth.
He was able to maintain power and keep softbank afloat while losing billions during the dotcom crash. So he has powerful backers and contacts who believe in him and are willing to carry him during rough times. That's very rare. In many ways, he reminds me of bezos and musk. For some reason, they are able to get the support of big money while losing a lot of money.
Yes, of course there is going to be a lapse in their due diligence at some point. It is just like the whole housing crisis in 08. Banks eventually were giving money to practically everyone and then we all know what happened in the end. As a VC, at some point, you need to get your money back plus a return to keep the fund going.
IMO, It is quite obvious there is a bubble in tech forming. I look at some of these companies and don't even know how they can justify the current investor expectations. I see people justify amazon's high valuation by saying stuff like "well if they get x % of WORLD retail sales...". It just shows the lack of depth in understanding that these people have. I am sure there is similar overly optimistic views occurring in the VC space as well.
I mean it's obviously bad for the LPs if it all goes to zero. But there's no systemic risk to the financial system that taxpayers will have to shoulder if that happens, which is what the government or regulators should care about.
