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Chart of the Week: Softbank Will Need Gargantuan Exits to Meet Return Expectations
This week’s content brought to you by Andrew Zhan and Adam Augusiak-Boro
Last week, we published a report highlighting the colossal undertaking Softbank faces in delivering competitive returns to its investors from its unprecedented $100 billion Vision Fund. Vision Fund has been a hot topic in the venture world since its inception just over one year ago given its size (by far the largest in VC history) and its investment pace. In the past year alone, the fund has deployed a record $40B+, including key investments in Uber ($9.3B), WeWork ($2B), Doordash ($0.5B) and Compass ($0.5B). We provide a data-driven analysis to illustrate what it will take for Softbank to successfully monetize these bets.
Key findings from our report include:
Required Exit Valuations for Vision Fund Portfolio Companies Uber and WeWork to Generate 20% Return
Source: EquityZen estimates
Required Vision Fund Portfolio Company Valuations at 20, 30 and 40% Return Hurdles
Source: EquityZen estimates
While the jury is still out on whether Vision Fund can pull this off these feats, one thing that is clear is the impact it is having on the VC landscape. Masayoshi Son, Softbank’s CEO, has been quite transparent that one of his primary objectives is to provide entrepreneurs with limitless capital to pursue the next generation of technological innovation. With a $100 billion checkbook and a clear appetite for tackling the most polarizing tech companies, the Vision Fund is crowding out competition, proliferating megarounds and lowering the cost of capital across the VC sector. We believe these themes are only likely to grow as other VCs follow suit with their own megafunds to compete, as Sequoia has recently done.
To read more, please download our report here.
Other items we are reading:
Finance & Research Lead, EquityZen
Root Insurance - Insurtech startup raises $100 million - gets valued at over $1 billion
Upgrade Inc. - Upgrade, the newest lending startup of Lending Club founder Renaud Laplanche, has raised $62 million in Series C funding
Sonder - Sonder Raises $85M in Series C Funding; $135M in Total
Rakuten - Rakuten Aspyrian Raises $150 Million in Series C Financing
Evolve Vacation Rental Network - Evolve Raises $80 Million for Vacation Rental Management Tech
Narvar - Retail Technology Provider Narvar Raises $30 Million in New Funding
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