September 5, 2020
Photo: Tomohiro Ohsumi/Bloomberg via Getty Images
Hello and welcome to Pipeline. I hope this kicks off a great three-day weekend for you. I have big plans, like signing off Twitter for a few days and regaining my surge capacity. This week: The drama of @VCBrags, more online harassment, and where SoftBank is investing with Vision Fund 2.
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SoftBank's Vision Fund made headlines with bets on Uber and WeWork — and the sky-high valuations that collapsed shortly thereafter. But after closing the fund and keeping a low profile, SoftBank is starting to place some new bets, and its targets have changed.
Turns out, SoftBank is the "Nasdaq whale" that fueled the tech stock rally, according to a bombshell report from the FT. It reportedly spent billions to buy call options and set up a new unit to control its public investments. (SoftBank declined to comment on the report.)
The public market play is definitely new and comes with the alarm bells of having watched valuations balloon in the private markets thanks to the Vision Fund. But it's not all that SoftBank is doing: It's now restarted investing with its Vision Fund 2.
First, a reality check on VF2, which SoftBank originally announced last summer as a $108 billion fund focused on AI. SoftBank was going to pony up $38 billion for the fund, then have a bunch of companies like Apple, Microsoft and Foxconn round it out.
So while VF2 might not be closed, it's already busy. While we wait to see if the second fund can match or exceed the size of its predecessor, in the meantime SoftBank's own cash is being used to write checks and has committed over $2 billion in nine companies so far, the firm said.
But SoftBank can't resist writing some big checks. Chinese ride-sharing startup DiDi announced over the summer that it had raised $500 million, led by the VF2, for its autonomous vehicle unit. VF2 also wrote a large check into real estate platform Beike, which went public in August.
Still, Masa Son has said that the firm's "strategy hasn't changed,"according to The Wall Street Journal. And it's still attracting entrepreneurs who are willing to look beyond the headlines and focus on the positive side of things.
Join us on Thursday at 9 a.m. PT for a deep-dive conversation on the state of the cloud. Join Tom Krazit as he explores how best practices for cloud computing are evolving during an unprecedented economic period, with a panel of experts featuring PagerDuty CEO Jennifer Tejada, Okta CIO Alvina Antar and Novant Health CDTO Angela Yochem. This event is presented by Pure Storage.
What's one startup or product that failed or was shut down that you wish were still here today?
Accompany. I loved getting their email briefs before my meetings. They'd include details on the people and organizations I was meeting, making it easier to build relationships quickly. Unfortunately, Cisco acquired Accompany and then shut it down.
What's a secret obsession of yours that most people don't know about?
Reflexology, a form of massage involving applying varying levels of pressure to the feet. Yes, there is a bit of pain involved, but after all the foot knots are worked out … WOW. It feels so good that I'm working on getting my husband to learn how to do it on me.
What do you think is the most significant change happening in venture capital right now?
A new type of VC has arrived. The new VC is scrappy, transparent and community-centric. New investors are not waiting for a Sand Hill Road fund to give them a VC golden ticket. They're carving out their own path and building out their brands online (e.g., Twitter, Substack). These investors are sharing their values, journeys and investment thesis and harnessing personal deal flow. That deal flow is increasingly becoming the communities that the investor serves and writes checks into. New and old LPs are watching all of this happen and wanting to invest in these investors. That's leading these new investors to launch new funds — raising money from LPs and investing in founders in their respective communities.
What did you want to be before becoming an investor?
There was a time when I took a sabbatical from the tech world to live out my dream of living a slower-paced life as a yoga instructor. We moved away from the hustle and bustle of Los Angeles to relaxing, sunny San Diego, and I went through a 200-hour yoga teacher training program. But I found that while I liked yoga, I missed the fast pace of the tech scene. So, I jumped back in, and fast forward — I'm now co-founder and general partner at The Community Fund alongside my partner Jesse Middleton.
What was the biggest lesson you learned in raising your new fund?