Softbank is a multinational conglomerate headquartered in Tokyo, Japan. It is one of the most successful and established investing companies in the world and its ‘Vision Fund’ holds stakes in companies such as Alibaba, Sprint, Ola, Yahoo Japan etc. Founded by Masayoshi Son in 1981 who is the current CEO and Chairman of the Company.
Soft Bank launched the Vision Fund in January 2017.
Rajeev Mishra is the CEO of the $93 Billion Fund. He is an IIT Delhi, University of Pennsylvania and MIT Sloan School of Business Alumnus. He receives an annual compensation of $11.3 Million(Cash+Stock). As of this Year, they had utilized almost 40% of their fund.
In what type of companies would they invest in?
The vision of the fund is to invest in technological companies with the prime aim on the management and leadership of the company, which they consider as the pre-requisites for the success of any company. They are targeting companies which are not in their early stages but are well defined and have a potential to succeed and make it large.
They would invest only in private companies and not public companies, as according to them, investing in a company and then making it go public, makes them earn exponential returns, such as their $20Million investment in Alibaba, the Chinese Conglomerate which returned $60Billion, when Alibaba went Public in 2014, which is now worth over$140Billion(7000% return on investment!).
A compounded annualized return(CAGR) of 63.54%, which implies that if you had invested Rs. 10,000, then it would become Rs. 16,354 in an year and over Rs.7 Crores after 18 Years, if you are constantly earning the return which Softbank did, through which you can afford a house in the Hamptons!!
They are willing to invest significantly more in every company through this fund provided that the companies make sustainable global business plans. They motivate the companies to achieve the maximum because they know that if these companies don’t do it then some other may and this drives those originally selected companies to show perseverance to do something today that can redefine the future.
It aims to invest primarily in the USA and China, as these are the startup hotspots. It may even give the Indian Companies a chance, provided they prove their mettle.
Which Companies have they invested in through this Fund?
Flipkart, Ola, Uber, Paytm, OYO, Didi Chuxing are the famous startups in which this fund has invested and these are said to be one of the best companies to have invested in the past year!
How did it raise $100Billion?
The Vision fund is a consortium of Public Investment Fund of the Kingdom Of Saudi Arabia, Mubadala, Apple, Foxconn, Qualcomm, and Sharp. Other Investors get 7% fixed return over the 12-year life cycle of the fund plus the amount invested through equity.
How would the companies benefit?
Softbank, with its global presence and thriving ecosystem, can benefit the companies a lot in their management and future development, which otherwise may not be possible for such companies, to interact with other companies in the vision fund and help each company to achieve its maximum potential.
With a long term vision, international impact, over 40 Years of Experience, exponentially high returns on investments by making the companies to develop and making them go public, Softbank is all set to make its presence more felt throughout the world and shows that this strategy of theirs to make a new fund with a new dynamic CEO, who may take over after its founder, Masayoshi Son, shows that Softbank is truly thinking of the long term and wishes to make a radical and dominant change in the way investments are made, they are to be taken seriously and may give other investors a run for their money.