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Softbank is making quite a name for itself, but in ways it might not expect. Nary a week has passed in 2017 when a headline hasn\u2019t reported\u00a0that Softbank<\/a> \u2014 the multinational conglomerate currently raising a stunning\u00a0$100 billion<\/a>\u00a0fund \u2014 is in financial talks to invest in yet another\u00a0tech company.<\/p>\n This week, Softbank is reportedly in discussions<\/a> to pour $1.4 billion into the India-based digital payments company Paytm<\/a>. Last week, it was reported to be close to an investment<\/a> in Improbable Worlds<\/a>, a London-based virtual reality startup backed by Andreessen Horowitz. Last month, the reports centered on talks that Softbank is having with coworking giant WeWork<\/a> about a new round of funding\u00a0could reach into the billions of dollars<\/a>. (So far, $300 million<\/a> has come through.)<\/p>\n Even news of the ostensible closing of Softbank\u2019s\u00a0new Vision fund\u00a0\u2014 which is unprecedented in its size\u00a0\u2014 was leaked<\/a> in February. The\u00a0reality, says sources familiar with the fund, is that it could be another six to nine months before every i is dotted and t is crossed, given how many investors, countries, and regulators are involved.<\/p>\n Certainly, some of these\u00a0deals will happen\u00a0as widely anticipated. Softbank\u2019s negotiations with Didi Chuxing<\/a>, China\u2019s ride-hailing giant, were leaked to the media nearly one month<\/a>\u00a0ago;\u00a0the deal was made official<\/a>\u00a0this week.<\/p>\n Last October<\/a>, it was was reported that Softbank was in talks with the satellite internet startup OneWeb<\/a> about a strategic tie-up. Softbank invested $1 billion in the company two months later<\/a>. (In February, it invested another $1.7 billion<\/a> into a merger that\u00a0will see\u00a0OneWeb combine with\u00a0competitor Intelsat<\/a>.)<\/p>\n Still,\u00a0the internet is littered with stories of companies that were reportedly on the verge of sealing a deal with\u00a0Softbank\u00a0and that did not. In 2014, it was reported to be eyeing an investment<\/a> in the mobile giant Vodaphone Group;\u00a0nothing came of it. Last year, at least a dozen\u00a0outlets reported that Softbank was\u00a0in talks to buy a 20 percent stake<\/a> in the beleaguered<\/a> Indian handset maker Micromax Informatics<\/a> for up to $1 billion. That deal never closed, and one source familiar with Softbank\u2019s thinking says it was \u201call bullshit. There was zero chance they \u00a0would even consider investing in Micromax.\u201d<\/p>\n Talk Talk<\/strong><\/a><\/p>\n For venture industry watchers, such leaks are highly unusual, to say the least.\u00a0The typical modus operandi\u00a0in VC land is to \u201ckeep quiet if you have an inside track on an investment, because you don\u2019t want to create competition,\u201d notes Tom Peters, the founding partner and managing\u00a0director of the advisory services firm\u00a0Inverness Advisors<\/a>.<\/p>\n \u201cObviously, there are [venture] players that pay attention to each other and compete for deals and have relationships with the same founders, and they\u2019d rather keep what they\u2019re doing quiet until a deal is done.\u201d<\/p>\n So-called optics<\/a>\u00a0are another reason that no one in venture capital\u00a0wants to announce a deal until it\u2019s closed. \u201cDeals that don\u2019t happen can certainly make it harder to continue conversations with other investors,\u201d says Peters. He believes that people \u201cgenerally underestimate how hard it is to get a deal of any nature closed,\u201d and that it \u201cshouldn\u2019t\u00a0reflect negatively on a company if a deal doesn\u2019t come to fruition\u201d given that a reason\u00a0for\u00a0abandoning talks \u201ccould be anything.\u201d Still, negotiating parties have tended to\u00a0keep\u00a0such conversations confidential.<\/p>\n So what\u2019s so different about Softbank? A good many things, say those who\u2019ve followed the company for years and are wholly unsurprised by the dizzying number\u00a0of stories reporting on the company\u2019s conversations. One such analyst, Singapore-based Atul Goyal, a managing director at the investment bank Jefferies, says that it\u2019s nothing new, in fact. \u201cIt may be unusual for the venture industry [for talks to leak], but given the number of parties involved with Softbank, it may not be unusual for Softbank.\u201d<\/p>\n Goyal is speaking partly\u00a0of the long and growing list of limited partners who are committing capital to the Vision Fund, a group\u00a0that already reportedly includes Apple,\u00a0Qualcomm, Foxconn Oracle Chairman Larry Ellison, and Saudi Arabia\u2019s Public Investment Fund, which said last year it would contribute up to $45\u00a0billion after apparently\u00a0lengthy\u00a0talks<\/a> between Softbank founder and CEO Masayoshi Son, and Mohammed bin Salman, who is Saudi Arabia\u2019s deputy crown prince.<\/p>\n Says another\u00a0Softbank analyst who asked not to named for this story, \u201cIt\u2019s essentially LPs who\u2019ve never invested in VC or where this is their first time investing in tech, and they don\u2019t know how it\u2019s done.\u201d<\/p>\n The size of some of the deals that could potentially involve\u00a0Softbank is likely another\u00a0factor in word seeping out. While venture-size deals haven\u2019t routinely leaked before their close, the current\u00a0landscape features\u00a0\u201csignificantly larger rounds\u00a0than in the past, and they\u00a0happen over time and in very long chunks,\u201d observes Peters.<\/p>\n It\u2019s no surprise that these companies are seeking\u00a0meetings with\u00a0Softbank. As Son told Bloomberg<\/a> earlier this year of Vision Fund, \u201cThis won\u2019t be a typical fund\u00a0. . .\u00a0Most of our investments will range between 20 and 40 percent, making us the largest shareholder and board member, in a position to discuss strategy with the founders.\u201d<\/p>\n But such deals also involve a lot of people, from bankers to shareholders to management teams, some of whom may have their own agenda in leaking discussions to the media.<\/p>\n Lies<\/strong><\/a><\/p>\n So how to tell fact from fiction when it comes to Softbank? For his part, Goyal suggests that the more noise around a deal, the less likely it is to be completed.\u00a0\u201cThe biggest deals that happen are unlikely to get reported in advance, because those involve Masa, and he is very discreet.\u201d<\/p>\n He points to Sprint\u00a0and ARM as \u201cexamples of how [Son]\u00a0gets involved directly.\u201d<\/p>\n In 2013, Sprint shareholders approved a $21.6 billion deal<\/a> with SoftBank, giving the company control of the carrier. It took eight months of discussions to finalize an agreement between the two, but Softbank\u2019s\u00a0plans initially surprised many, not least because Sprint seemed more likely to merge with a domestic rival. (Sprint remains Softbank\u2019s largest American asset.)<\/p>\n Similarly, SoftBank took the the tech world by surprise last year when it announced\u00a0plans to buy British chip designer ARM Holdings for roughly $31 billion<\/a> \u2014 \u00a0the biggest-ever purchase of a European tech company.<\/p>\n It has since sold 25 percent<\/a>\u00a0of its stake in ARM\u00a0to the Vision Fund, reportedly to woo Mubadala, an\u00a0Abu Dhabi state-backed investment group, into investing in the\u00a0vehicle.<\/p>\n Says the analyst who asked not to be named, \u201cYes, Softbank is \u2018involved in discussions.\u2019 They have 15 to 20 people [investing the Vision Fund] and they sit down with management teams and they listen. Sometimes, it\u2019s because Softbank is interested in the company. Sometimes, it\u2019s because they have other investments in the ecosystem. A lot of these are just meetings.\u201d<\/p>\n Put another way, some will turn into real investments. But don\u2019t be surprised if a healthy percentage end up going nowhere.<\/p>\n \u201cOf the 10 or so deals that are being reported in media,\u201d\u00a0says Goya, \u201ca majority of these will not come through.\u201d<\/p>\n Featured Image: Image: Koki Nagahama\/Getty Images\/TechCrunch<\/small><\/p>\n","protected":false},"excerpt":{"rendered":"![\"\"](\"https:\/\/tctechcrunch2011.files.wordpress.com\/2017\/05\/gettyimages-477550734a.jpg?w=680\")
This week, Softbank is reportedly in discussions to pour $1.4 billion into the India-based digital payments company Paytm. Last week, it was reported to be close to an investment in Improbable Worlds, a London-based virtual reality startup backed by Andreessen Horowitz. Last month, the reports centered on talks that Softbank is having with coworking giant WeWork about a new round of… Read More<\/a><\/p>\n\n<\/img><\/a>
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