Softbank and Saudi Arabia have partnered to launch a $100 bln technology investment fund, which will focus on emerging tech firms and unorthodox markets outside the realm of common investments such as oil and real estate.
Both Softbank and Saudi Arabia’s Public Investment Fund (PIF) have agreed to provide $25 bln and $45 bln respectively to the Softbank Vision Fund, while the remaining $30 bln will be invested by an undisclosed group of investors.
Masayoshi Son, Chairman & CEO of Softbank stated:
“With the establishment of the Softbank Vision Fund, we will be able to step up investments in technology companies globally. Over the next decade, the Softbank Vision Fund will be the biggest investor in the technology sector. We will further accelerate the Information Revolution by contributing to its development.”
Impact on Fintech Ecosystem
In a statement, Chairman Son emphasized that the Vision Fund will base Softbank Group’s existing portfolio of companies to fund innovative and emerging technology startups.
Since early 2015, Softbank has continuously invested in major Fintech firms including SoFi, leading multi-billion dollar funding rounds for global expansion and aggressive growth of userbase.
While Softbank recognized the value of the investment exceeded the expectations of the Fintech startup, the conglomerate convinced SoFi to eliminate the idea of an initial public offering (IPO) and allocate the $1 bln investment to accommodate SoFi’s growth.
This aggressive investment approach of Softbank in Fintech startups is crucial in the development of the global Fintech industry in general as the revenue margins of Fintech firms drastically change depending on the rate of growth of their user base.
Based on the current portfolio of SoftBank, it is highly likely that the Vision Fund will set a focus on Fintech startups by providing enough capital for both early stage and established companies to accommodate their growth.
More importantly, the Softbank group already runs a variety of accelerator programs such as the Softbank Innovation Program in which Fintech startups are granted the opportunity to secure multi-million dollar funding rounds based on prototype development and test marketing results.
The Saudi Arabia PBI and Softbank may consider the possibility of funding existing Fintech firms in Softbank’s accelerator programs through the Vision Fund, which would create a massive opening for startups to maintain the momentum of their growth.