The investment giant poured unprecedented billions in Latin America, but executives say they are now taking a more conservative approach.

After shaking up LatAm startup scene, SoftBank bets on AI in region seen as laggard | Semafor

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Jensen Huang Once Turned Down SoftBank Offer to Fund Nvidia Buyout - Business Insider

NVIDIA today announced that Japan cloud leaders SoftBank Corp., GMO Internet Group, Highreso, KDDI, Rutilea and SAKURA internet are building AI infrastructure with NVIDIA accelerated computing, networking and software to accelerate transformation across the nation’s robotics, automotive, ...

Japan Cloud Leaders Build NVIDIA AI Infrastructure to Transform Industries for the Age of AI | NVIDIA Newsroom

The collaboration comes amid skyrocketing demand for Nvidia chips, as companies scramble to secure supplies.

SoftBank Is Nvidia's First Blackwell Chips Customer - Business Insider

SoftBank is currently developing a large language model (LLM) as the basis for generative AI, according to the report

SoftBank invests to boost computing power for generative AI

SoftBank is taking steps to build a new AI language model. This is great news for NVDA stock investors, as Nvidia will have a new customer.

SoftBank Is Betting Big on Nvidia (NVDA) Stock | InvestorPlace

SoftBank will invest $960 million by 2025 to bolster its computing facilities in preparation for its own generative intelligence model.

SoftBank will reportedly invest nearly $1 billion in AI push, tapping Nvidia's chips

It seems that the U.S. ban on AI chips was bypassed by Chinese entities, including universities and research institutes, according to Reuters. A Reuters review of t...

Chinese Entities Access Nvidia Chips, While SoftBank Boosts Investment in AI - TipRanks.com

Junior WeWork creditors allege SoftBank and other investors used pre-bankruptcy debt restructuring in 2023 to “mitigate their losses.&quot;

WeWork Junior Creditors Ask Bankruptcy Court To Sue SoftBank

SoftBank

softbank

First, some housekeeping. Check out my podcast on ; my subscribers jumped from 100 to 3.5k in 3 weeks. YouTube Now, to the weekly programming. Should you invest in a Softbank’s ARM IPO? The data says No. Softbank took ARM private in 2016 for $32B. And it’s now coming to public markets at an estimated valuation of around $50B. But as a retail investor interested in tech, should you consider investing in ? ARM The data says no. Out of 25 companies backed by Softbank that went public, only four companies are above their IPO price. And the average loss in the 21 companies that are below IPO price is a whopping 45%. Knowing these numbers, I wouldn’t touch ARM IPO and instead wait to see the price settle down. If the recent subscription interest claims are true--that it’s six times oversubscribed--it’s clear that large companies are going to take a stake in ARM because of its strategic importance. Google, Apple, TSMC, and Intel all have an interest in ARM to stay a neutral player in the chips game. This will be the main reason why ARM’s IPO will succeed. But as a retail investor, don’t be influenced by the IPO FOMO. The reason why 14 Toyota manufacturing plants shut down last week As someone who works in developing storage products at Azure, this story is fascinating. Last week, 14 manufacturing plants of Toyota shut down. The reason was a botched IT maintenance issue, which became an issue with full disk memory across a bunch of servers, and the backup mechanism to switch disks was not working, which ultimately took down the IT systems and the manufacturing plants. Almost all IT departments have a backup mechanism designed to handle different failure scenarios from disk failure, VM failure, network failure, region failure & data center failures. Something as common as a disk full error taking 14 manufacturing plants down is fascinating. 3. You are what you consume The one conversation you should listen to this week if you are interested in what is happening in India’s venture capital scene and how India’s top VCs are thinking is the conversation Nitin Kamath hosted on his YouTube channel. My takeaway in this conversation was both the Kamath brothers felt that investing in VC funds in India was not the best way to use their money & it seemed like they were hinting at the hypocrisy of valuations at which startup equity is being dumped to Indian retail investors. One point that the VCs bought briefly but didn’t delve deep into it was that it’s not all the fault of VCs that this was happening it’s the founders who are making most of those decisions. I particularly enjoyed Blume Ventures co-founder Karthik’s view it seemed like they had original thoughts, while the other two VCs were boringly non-original. Also published . here

Could It Be Worth Investing in Softbank’s ARM IPO and Other Tech News of the Week

Masayoshi Son says his SoftBank Group is the goose that lays the golden eggs. At the group's earnings meeting on Feb. 8, he wasted no time in telling attendees about his recent investments in artificial intelligence startups and said he wanted to replicate a number of unicorns in Japan, sweeping away the sluggishness he felt in front of investors this time last year. The bottom line is that SoftBank's results have improved dramatically, with a total net profit of about $29.9 billion between April and September 2020 (up 371 percent year-over-year). Nearly 40% of this profit was made in the last three months ($11.7 billion), and the year-over-year increase for this period was an impressive 879.5%. SoftBank's profits were made up of a variety of investment income, helped by last year's hot stock market. in the fourth quarter of 2020, the SoftBank Group made a profit of $13.45 billion through the appreciation of its investments in the Vision I and II funds, and another $1.035 billion through speculation in the secondary market by the Group itself and its NorthStar unit. This helped SoftBank to have its best quarter ever. "We're finally in the harvest phase," Son said at the revenue press conference. But he also said the profits were just accounting bookkeeping numbers, not happy or sad. "As a businessman, as an entrepreneur, this is not a satisfactory level yet. We still have room to grow." At this point, a slide behind him shows a goose with a sign around its neck saying "Artificial Intelligence for Change." As he spoke, the goose on the slide laid golden eggs. Each egg represents a successful IPO exit that SoftBank is betting on. But this bookkeeping is extremely volatile. Tens of billions of dollars of profit in good times, and when the market is poor, such as in early 2020, it is easy to generate a lot of losses. Warren Buffett, who also holds a lot of underlying investments, has warned investors not to pay too much attention to his net profit changes, because that does not truly reflect the company's operations. Note 1: SoftBank's cumulative investment income from its big openings. This follows the loss of WeWork investments and the shrinking valuations of several other companies that led SoftBank to lose nearly $17 billion in the fiscal year ending March 2020. The market didn't believe him -- SoftBank shares fell to a two-decade low early last year; shareholders didn't believe him -- and no institution was willing to inject capital into the second phase of the Vision Fund. "In the second half of the first phase of the Vision Fund, we had some difficulties, didn't perceive some situations, got a lot of criticism and learned a lot of lessons," Son said. "But at the time, I mentioned that we had learned our lessons...and despite our unpopularity, we just launched Vision Fund II with our own money to run this business. Our vision and strategy never changed." As of Feb. 5 of this year, the 12 public companies in Phase I of the Vision Fund added $25.464 billion in value to SoftBank. The three listed companies in Phase II added $5.349 billion in value. SoftBank also launched four shell companies (SPACs) dedicated to mergers and raised $1.4 billion from investors. Note 2: Investment income of Vision Fund I as of 2021.2.5 Excluding Alibaba and Yahoo, the biggest contributors to SoftBank's profits were Doordash (+$10.7 billion), a take-out company that went public last December, and Uber (+$5.1 billion), which went public even earlier. DoorDash has benefited from the post-epidemic boom in the U.S. take-out restaurant market and the abundance of capital in the market after the Federal Reserve's big let-down. from January to September 2020, Doordash's revenue was $1.92 billion, nearly four times the same period in 2019. Uber's share price recovery is also linked to takeaways, as UberEats fills the revenue gap left by its shrinking ride-hailing business and tries to recoup capital and improve margins by selling businesses such as the money-burning Autopilot in a bid to meet the company's commitment to the board of directors to break even by the fourth quarter of 2021. The valuation fix is partly due to the fact that its main business, online taxi orders, has exceeded year-ago levels and that Drip has made progress in a number of new businesses, and partly because the market value of Uber, which it uses as a benchmark, has rebounded sharply. Alibaba and Ant Group are inseparable topics for Masayoshi Son. Both because of SoftBank's significant interests in the two companies, and because he and Jack Ma maintain a personal relationship of up to two decades. So when reporters got to the Q&A session, Masayoshi Son was quickly asked how he viewed China's recent introduction of new regulatory policies such as anti-monopoly guidelines, and whether he had recently contacted Jack Ma and how he viewed his Bund speech. Masayoshi Son took a more positive view of regulatory adjustments overall. He said things like Ali and Tencent are now probably in the middle of such (monopoly) discussions for the first time, after Chinese Internet companies did almost anything they wanted to do. But in Europe and the United States, antitrust laws and strict financial regulation have long been in place, and SoftBank has had problems and setbacks in those markets and will learn from them. A similar regulatory framework is necessary for larger, longer-term business growth, and the policy adjustments in China are "not beyond what we've seen in our own country, in the U.S., or in Europe. So I think we will continue to see good growth and even a more positive impact on the future of the Internet." On the issue of Jack Ma, Son said the two exchanged hobbies like painting and did not talk business. As for the Bund speech, "I don't know the details, I just know from the news what happened and I don't want to make any detailed comments." But he re-expressed his positive view of Alibaba, "Alibaba and Ant Group have been a very worrying topic for the market, and we have experienced and seen Alibaba's share price fall. I understand that many people are worried, but it has recovered at this stage. Last week Alibaba also announced a 50% increase in net profit, so the business itself is actually running smoothly and growing steadily. That's how I understand it."

The Future of SoftBank: The Goose that Lays the Golden Eggs

The story of Silicon Valley is one of regular cycles. A company is founded, scales rapidly, it’s employees start their own companies, and the cycle repeats. The first cycle began in 1965 with , the first silicon-based high tech company in the bay area. In less than two years the company had made numerous breakthroughs and eight employees, nicknamed the , left to form their own company, Fairchild Semiconductor. In just three years Fairchild experienced explosive growth, generating over $20mm annually, an amount equivalent to over ten times that today. As its employees participated in this massive wealth creation they started spinning out on their own, growing both the number of companies and value created exponentially. Shockley Semiconductor Traitorous Eight The “Fairchildren”. Graphic courtesy of Techcrunch With momentum quickly outpacing it’s east-coast counterparts, the Silicon Valley cycle started to repeat. A few of the Fairchild spinouts (lovingly termed “Fairchildren”) were able to repeat the success of the company from which they came, leading to their employees doing as their founders did and spinout from the spinout. This is how Silicon Valley continued to grow and innovate. Employees left to create companies, some of these companies did extremely well, then their employees cashed out and created companies of their own. The most talked about example in modern times is Paypal (those that have left are collectively called the “Paypal Mafia”), but it’s also happened with and among others. Facebook Twitter Image courtesy of Fleximize And so the cycle has repeated… until now. The recent rise of mega-funds like SoftBank’s $100bn Vision Fund means that companies are staying private longer. The employees whom previously would have taken their earned equity and broke off to launch their own ventures have instead — as TechCrunch vividly describes—been handcuffed : “If you had the ability to sell a portion of your shares to pay the tax on them, that would be one thing,” says one longtime Uber employee. “But you can’t. So unless you’ve already made a lot of money or want to walk away from very valuable equity, you stay.” Some employees are even at risk of losing their equity outright! As , most types of equity compensation that startups use have expiration dates. This made sense when the average time to IPO was 5–7 years, you don’t want open ended liabilities on your balance sheet so you’d slap on a 10-year expiry date confident that by then the company would either be public or dead. But with SoftBank and other late-stage mega-funds supplying amounts of capital previously only available in the public markets, that’s just not the case anymore — AirBnb turns 10 next month, Uber will be celebrating it’s 10th birthday in March, while . Alfred Lee over at The Information reports Palantir is 15 and may never go public If companies had planned this from the start, communicated to employees their intention of staying private longer, perhaps indefinitely, and adjusted their equity compensation structures appropriately, that would be one thing. But they didn’t, and you can’t really blame them for that. Back when these companies started they had every intention of going public just like all the companies before them, the late-stage mega-funds didn’t exist yet. Now however the cycle has been broken, we’ve entered the land of the unicorns, and no one knows where it will take us. So while we can’t blame companies for not anticipating staying private this long, we can most definitely blame them for not doing nearly enough to ameliorate its effect on employees. So unicorns, it’s time to do right by your employees and the startup ecosystem upon which you built your success. . Hell, go one step further and invest in them! You thought they were making good money for you as employees, watch what they do for you out on their own. Just look at , one of the most successful investors ever, which began with a founder investing in the employees spinning out of his company. Make it easy for your employees to cash out their equity and wish them well as they venture out on their own Kleiner Perkins

SoftBank is Stifling Entrepreneurship

At the end of the year, two very important events took place in the crypto world. Many media mentioned them in passing, although the events are really significant. The first is the adoption by the Bundestag of a law on the use of b itcoin cash and other cryptocurrencies by German banks from the beginning of 2020. Second, the l aunch by Japan's SoftBank of a crypto wallet-enabled debit card . Despite the fact that this information was later refuted it somehow passed and it is worth looking at. Let's start with . If you are a bit familiar with the banking infrastructure of Japan, you know that conservatism and continuity are traditionally important for the culture of this country. SoftBank Features of this traditionalism are expressed in numerous cults that combine respect and devotion to historical roots. And, although the XX century made its adjustments and there were ultramodern branches of culture, it does not change the basic outline of the psychology of the Japanese nation as a whole. Conservatism remains one of the important features of the Japanese islanders, so the choice of the Bank is made only once and there is little that can change this decision. In the style of " why change something when I have already made a choice." This is the cornerstone of the Japanese banking system. If the client is constant, and the probability of his departure tends to zero, then why change something? And with a highly developed financial market in Japan as a whole, the banking sector remains very far from the forefront of its development. This applies to both the infrastructure and the service part. Until recently, the use of chip cards was a problem. I'm not talking about alternative types of payments (PayPass/PayWave). For the same reason, wechat QR codes are so popular in China. The Central Bank of Japan works under the legislation adopted in 1942, and Bank branches often work from 10 to 15. It is not uncommon when stores do not accept cards or do not always accept. Cards usually lack the concept of cash-back, and Deposit rates are negative. is a mega Corporation, which focuses a whole bunch of innovative companies and startups. Among which more than 25% in AliBaba, almost 50% Yahoo Japan, 15% Uber and many others. Through the Vision Fund (with a capitalization of more than $ 100 Billion), SoftBank group buys shares in promising innovative companies. SoftBank Of course, there are also failures, such as WeWork (where the company owned an 80% stake). In November, Softbank reported a $ 4.6 billion loss on its investment in WeWork. According to , SoftBank's standard investment check is from $100 million, and its portfolio of investments is very diverse, although concentrated mainly on innovative companies with a vast geography. Business Insider Despite the name SoftBank, it is not quite a Bank, or rather not a Bank at all. And above all, the largest conglomerate in Japan, which emerged only in the 80 - ies of XX century. Which over the past 30 years has always been at the peak of technology and built its strategy on innovative products, buying them tens of billions of dollars a year. In the 10-ies of the XXI century FINTECH received a powerful development in startups and SoftBank did not pass by. In addition to investing in FINTECH startups in India, in June 2019 they confirmed a 200 million investment in Brazilian (formerly EasyBank). That is, SoftBank's interest in FINTECH is not accidental. Creditas Moreover, according to the , SoftBank founder Masayoshi Son, lost more than 130 Million dollars on the purchase of Bitcoin at the peak of its price in December 2017. WSJ However, Son often makes multi-million dollar investments just after a few hours talking with the founder of the startup. In the structure of there are already startups associated with blockchain. For example, in October 2019, it was announced that it was investing in the project, which develops cross-Protocol Blockchain solutions. SoftBank TBCASoft And although the first application to be implemented as a result of this cooperation is not directly related to cryptocurrencies, but is a FINTECH solution for paying for mobile communications abroad, the first step has already been taken. And in April 2019, a Memorandum of intent was signed, according to which SoftBank will invest 1 billion us dollars in the German FINTECH project . And it is again about FINTECH and Digital money. That is, the bridge to the crypt through the Blockchain and FINTECH has already been laid. WireCard The emergence of a crypto-card or crypto-Bank with SoftBank's participation is only a matter of time. Therefore, the flashed (quite possibly just prematurely) announcement of the release of the crypto card, will not take long to wait. Now back to the news about the adoption of a law that allows German banks to store, provide custodial services, buy and sell cryptocurrency (although and ). Bitcoin Cash ethereum Despite the strange set of cryptocurrencies likely to be expanded, Handelsblatt is happy to quote Sven Hildebrandt: "Germany is on the right track to create a crypto Paradise." It is necessary to understand that the law is carried out in full compliance with the European anti-washing legislation . And with the other hand, the European Parliament is absolutely clear - there will be no stablecoins in Europe. At least for now. Both of these news come with a pause in a week. Does this mean that institutions are interested in cryptocurrencies enough to enable banks to operate with them? More like no than Yes. Countries are trying to get into the cozy crypto world to control and stifle. Will the regulation and laws that establish the rules for banks? Probably not. Banks, in the end, will suffer a crushing defeat in this war, even having in the arsenal of such a heavy artel as state regulators. But the ability of German banks to work with cryptocurrencies makes the market much wider, and perhaps the Bundestag itself does not realize that it is opening a Pandora's box… https://www.businessinsider.com/running-list-softbank-investments-2017-7#arm-acquired-for-32-billion-62 https://www.nytimes.com/2019/11/06/business/softbank-loss-wework.html https://www.nytimes.com/2019/11/18/business/softbank-line-merger.html https://www.wsj.com/articles/softbank-founder-masayoshi-son-lost-130-million-on-bitcoin-11556017200 https://newsroom.ibm.com/2019-10-22-TBCASoft-IBM-and-SoftBank-Corp-Announce-Plans-to-Transform-the-Telecommunications-Industry-with-Cross-Carrier-Blockchain-Solutions https://www.wirecard.com/company/press-releases/wirecard-and-soft-bank-intend-to-form-large-scale-strategic-partnership-for-digital-payments https://news.bitcoin.com/german-banks-authorized-to-store-and-sell-cryptocurrency-in-2020/ https://www.consilium.europa.eu/en/press/press-releases/2019/12/05/joint-statement-by-the-council-and-the-commission-on-stablecoins/ https://www.consilium.europa.eu/en/press/press-releases/2019/12/05/joint-statement-by-the-council-and-the-commission-on-stablecoins/#

Banks, institutional investors, and Cryptocurrencies in 2020

2019 was a rough year for the co-working space company WeWork. At the beginning of the year it was valued at a whopping , making it the fourth highest valued startup in the world and at the end it was valued at less than by its biggest investor. 47 billion dollars 8 billion dollars Its CEO and Founder, Adam Neumann, was forced to resign, and 2400 of its employees had to be laid off (about 20% of its total workforce). WeWork was founded in 2010 by Adam Neumann and Miguel McKelvey. It gained popularity and quickly expanded to over 800 locations. However, their pursuit for an IPO (Initial Public Offering) to finally allow them to be traded on the stock market was disastrous as the company was forced to publish its which had been kept secret, through which it was made obvious that the company was far from profitable, prospectus as it lost almost 2 billion dollars that 2019 alone. Here are a few lessons to learn from the failure of Wework's IPO; Corporate governance WeWork’s corporate governance was extremely flawed. Adam used his position as CEO to profit from the company, and then using it to buy out property which he’ll then lease back to WeWork. taking direct loans from the company Adam would take any opportunity he could to profit personally, in order to use the word ‘We’ which he had previously trademarked. He even took low interest loans from the company. the company having paid him 5.9 million dollars Adam Neumann is also on the company jet, and he was also caught trying to smuggle drugs into Israel. known for doing drugs WeWork lacked effective corporate governance. Rebekah Neumann as chief brand and impact officer and also made her a part of the cofounders of the company. He gave senior executive positions to his close friends and family as well. These were some of the reasons the CEO Adam was forced to resign from the company. Adam recruited his wife Essentially WeWork didn’t realize that effective corporate governance was very important for both its IPO and reputation. Leaders of startups should incentivise far more effective governance and proper practices as it plays a vital role in serving both the members of the company and its shareholders Branding isn't all There is a difference when it comes to valuation between being a tech company and a non-tech company. WeWork tried to proposition itself as a tech company whereas it doesn’t manufacture technological software or hardware but rather it deploys data and analytics tools and technology to make more effective decisions. Nowadays, almost every company uses technology in some way or another to aid their business operations. Tech companies are invested in differently than non-tech companies. Although it usually takes a while for a tech company to return a profit, Tech companies are valued using their potential because reach is almost unlimited and they are capable of producing high margins while non-tech companies are valued using mostly their assets, revenue and profits. This brings to another co-working company, IWG plc, formerly known as Regus which had 3300 locations while WeWork managed 848 locations, and guess what, IWG is profitable, however it was valued at about 4 billion dollars while WeWork was valued at 47 billion dollars. Why? Because unlike IWG, WeWork has managed to make itself look like a tech company, even though it's just a tech-enabled one thereby giving it accessibility to cheap capital and investments. However, no matter how much it tried to escape the real estate label, even by changing its name to ‘The We Company’, it was still a landlord company that rents out co-working spaces to freelancers and enterprises. Profitability is key sometimes WeWork according to was the fastest growing lease company space in New York in 2014. WeWork had a huge amount of funding and capital and ignored losses while trying to increase revenue. Forbes In 2018, while its losses were almost 2 billion dollars, it was shocking to most people that the running costs was more than twice the revenue of a non-tech company. it had a revenue of about 1.8 billion WeWork essentially convinced investors without making any money or proving the viability of their business model. A business model that has been proven to fail countless of times. Rather than focusing on profitability, WeWork focused on growth, going into more ventures like their high end gym known as , a co-living venture , a private school run by Adam Neumann’s wife Rebekah, and acquiring unrelated companies like , a social network for organizing events and purchased a large stake in a spanish wave pool company. Rise by We WeLive WeGrow Meetup Wavegarden WeWork took a rather scattershot approach towards its ventures. Short term profit, long term debt is to sign long-term leases with landlords, which averaged about 15 years, dividing the space into smaller offices, and sub-leasing to freelancers, startups and companies for short-term monthly leases. WeWork’s business model WeWork essentially puts itself into long term debt for short term gains, even at the detriment of its. Critics argued that this was a very flawed business model and worried how it would fair in a time of recession or economic downturn. It could lose a lot of the money it gets from its leases which lasts a few months but will still be obliged to pay the property owner as they've signed years long leases. Whether WeWork bounces back and files for a successful IPO is unsure at the time, but the above lessons can be learnt from the mistakes it made.

4 Business Lessons From the Failure of Wework - The 47 Billion Dollar ‘Tech’ Company

: Vested Interest Disclosure The author's an independent contributor who received compensation from the company/ies mentioned in this story. While HackerNoon has reviewed the story for quality, the claims hereon belong to the author. #DYOR bloXroute secures $70 million in funding to build blockchain distribution network is a blockchain distribution network (BDN) provider for DeFi traders on Ethereum, Polygon, and BSC, which has closed a $70 million Series B funding round headed by SoftBank Vision Fund 2 and other big names like Blindspot, Dragonfly, Flow Traders, Flybridge, GSR, Jane Street, Lightspeed, ParaFi Capital, and Rockaway Blockchain Fund also participated in the round. bloXroute bloXroute is a worldwide content distribution channel aimed at increasing blockchain scalability. By offering mempool services and transaction/block propagation facilities, the services help decentralised finance (DeFi) traders earn more trades. BloXroute's unique network architecture speeds up to block propagation by up to 2 seconds, transaction propagation by up to 1 second, and transaction detection by up to 50-400 milliseconds. Uri Klarman, CEO of bloXroute, said: “We are thrilled to announce today's significant milestone as we welcome Softbank Vision Fund 2 and other new investors and thank them for this vote of confidence. This investment enables us to expand our team, extend our reach, and continue making the propagation of data more efficient and reliable.” The company, based in Chicago, supplies crucial technology for DeFi, which has expanded to a collective trading volume of over $1 trillion by 2021. DeFi transaction volume on bloXroute surpasses $1.5 billion per day, owing to an increased appetite for peer-to-peer trading. bloXroute has developed a massive Blockchain Distribution Network (BDN) that allows users to bypass congestion in the network and obtain crucial information, including buy and sell orders, pricing, holdings, liquidations, and oracle updates, practically instantly. Aaron Wong, an investor at SoftBank Investment Advisers, said: “We believe that bloXroute holds the key to unlocking faster transaction speeds and reduced latency on multiple blockchain networks, bloXroute’s global distribution network enables unparalleled transaction settlements for trading and we foresee exciting use cases to emerge in industries such as NFTs, blockchain-based metaverses and gaming. We are thrilled to partner with Uri and the team to help build a blockchain superhighway with uncongested performance.” The distribution industry cannot afford to embrace blockchain with a futuristic mindset. Whether it was the 2016 Egyptian phony cotton scam or the 2017 horse meat incident, the distribution business has been beset by problems that have eroded customer trust. The retail and wholesale distribution industries can benefit from distributed ledger technology by improved productivity, authenticity, transparency, and simplicity of doing business. Without the requirement for a single point of control, the industry may keep an accurate account of all data a product receives throughout its entire lifespan using a highly secured id. By nature, no single entity may unilaterally edit the information without the approval of other network members. Don’t forget to like and share the story!

BloXroute Closes $70 million Series B Funding Round Headed by SoftBank Vision Fund 2 

“The removal of data, and as a consequence AI monopolies, by more decentralised blockchains is as much a cultural backlash against Googlenomics as Bitcoin was to the financial crisis” — Jamie Burke, Outlier Ventures. Masayoshi Son, the charismatic leader of Softbank the $100bn venture fund and his 300 year vision of the future has been making headlines but for me it misses a fundamental paradigm shift happening in the Internet today. A change that could render many of his investments vulnerable. In short, the most transformational technology of tomorrow, from data collection to AI, will be increasingly open source, tokenised and highly decentralised. Why Softbank’s ‘winner takes most’ Web 2 strategy is flawed Softbank’s model takes the logic of the economies of scale and network effects core to Web 2 venture investing to the extreme, focusing on ‘winner takes most’ sectors. Son often opens meetings with ‘’imagine capital were no longer a problem’’ enabling the team to prioritise aggressive growth over profitability. If we look at Softbank’s portfolio they focused on a handful of synergistic categories such as: multi-sided marketplaces, real estate (offices, storage, robotics), e-commerce and logistics (last mile delivery). Often these investments are based on one primary premise: they are ‘AI optimised’ companies that at scale, and with a data advantage, can better optimise utilisation and capacity to outcompete on the fundamental economic unit costs of their market over the long-term. To support this thesis they are also investing in hardware companies like ARM and Nvidia that are making machine learning easier, faster and cheaper as well as software startups like Improbable, which provide a virtual environment to support the development of complex digital worlds. Interestingly, with Improbable, they have recognised that the gamification of networked problem solving may be the best way to parallelise machine learning at scale. And it’s here there is a hint at what may await them. The shift to shared ‘global public utilities’ This story starts with a shift of compute power away from cloud to open source internet protocols that enable the same benefits of scale but through distributed marketplaces. The most famous example being the Bitcoin blockchain: where billions in resources, including specialist hardware and energy have emerged ‘bottom-up’ coordinated by a simple algorithm and reward system. However, this was just the first example. Where Bitcoin mining was focused on mobilising hardware to solve a very particular mathematical game there are many other distributed systems emerging where parties commit resources to solve a variety of problems in exchange for digital rewards. In our own portfolio we have (enabling interoperability between traditional database silos), (for that data to be sold through decentralised data marketplaces to help train algorithms) and (where those algorithms can gain economic agency and sell their value to others). When combined they provide an emerging stack of technologies that level the playing field for startups by bringing economies of scale for a longtail of market participants. This means many of the old advantages that underpin Son’s vision such as data monopolies and centralised IT infrastructure will be available to all through these new ‘global public utilities’. Haja Networks Ocean Protocol Fetch.AI The advantages of proprietary datasets, their algorithms, and in-house talent will gradually diminish as open networks offer an attractive alternative. As governments push for sovereignty of data and users gradually respond to the incentivises of tokenised networks these new protocols it will challenge Son’s ‘winner takes most’ platforms. If these trends are not responded to by Softbank’s portfolio then the dream of building sustainable companies with any meaningful AI advantage is under threat, and so too are their valuations. Uber will become a company nobody chooses to drive for, Doordash a company that cannot recruit couriers and WeWork a heavily indebted commercial real estate company. In fact, the very economic model of Silicon Valley’s freewheeling ‘move fast and break stuff’ capitalism, at the heart of Son’s vision, is itself falling out of vogue as eloquently described in: ‘The Age of Surveillance Capitalism’. The idea of trusting platforms like Uber to develop benevolent AI to extract and exploit the ‘’digital exhaust’’ of our interactions is quickly becoming unacceptable and dated. So what could Softbank do next? Well, given they have already deployed 40% of their $100bn the best they can do is hedge at least some capital into the counter-narrative. However, what’s unique about these new protocols is because they are open source they aren’t as vulnerable to the typical response by incumbents: buy, assimilate or kill. Currently the ‘crypto’ market is 90% down from it’s 2017 all-time highs and furthermore, many next-generation protocols are only just coming to market, this time with bear market valuations. One thing that is in short supply right now in crypto is patient capital. So, If Son repeated what he did so well after the Dot Com bubble, with investments into Yahoo and Alibaba, he could ‘buy the dip’. Theoretically, Softbank could lead the investment round of every threatening new protocol coming to market or, more importantly, those which compliment its portfolio. Why? Because all these protocols are looking for adoption to effectively turn their technology into internet standards. If Softbank’s portfolio are the early adopters of these technologies they can adapt and protect their multi-sided marketplace cash cows secured by ubiquity of service, brand and network effects.. Bringing that much capital into the market combined with real-world adoption, would see the mother of all bull runs, with the potential for a trillion dollar crypto industry.

Softbank’s 300 year vision is already out of date, here’s why..

At this point I’m sure you’ve heard of the $100B Softbank Vision Fund that’s been making headlines around the world. With all this news traditional VCs now feel the need to keep up so they don’t get “left behind.” While this may seem like simply a PR/branding problem, it has fundamentally changed the industry with far-reaching implications. While some of the headlines below may seem ridiculous, it’s time to see what happens when the disruptors get disrupted. This change isn’t necessarily a bad thing. http://fortune.com/2018/01/08/term-sheet-monday-january-8/ http://www.businessinsider.com/sequoias-reportedly-raising-a-new-6-billion-fund-2017-12 https://www.recode.net/2017/12/20/16804282/sequoia-raising-new-fund-6-billion-softbank So lets break down how this happened, what it means and what affect it will have on the overall investing ecosystem: Softbank first announced their $100B Vision Fund in Oct of 2016 with a simple press release on their site. https://www.softbank.jp/en/corp/news/press/sb/2016/20161014_02/ Apple a few months later confirmed they committed $1B to it. and you can see everyone else who invested here https://techcrunch.com/2017/01/04/apple-joins-softbanks-vision-fund-with-1-billion-investment/ https://news.crunchbase.com/news/softbanks-100b-fund-league/ This completely overshadowed Greylock’s announcement of their $1B fund a few weeks prior. and Andreessen Horowitz raised their fifth fund of $1.5B in June 2016 too https://techcrunch.com/2016/10/10/greylock-closes-1-billion-fund/ https://a16z.com/2016/06/10/fund-v/ This $100B vision fund was announced two years ago but was probably in the works way before that. I’m sure a lot of insiders knew about it — which is why a handful of major VC firms raised huge funds in 2016 and now two years later are coming back for more. Even if most of the capital hasn’t been deployed and returns are definitely not realized. This brings us to today. The $100B fund has already deployed over $40B in capital ($10B more thanks to Uber) that is basically more than all the other VC funds combined. I don’t know how much overlap there is between the Vision Fund and Silicon Valley VCs. It would be an interesting project, if someone wants to find that out (to see if they directly benefited). As you can see from the headlines above, the tech press is allover traditional VCs for now having “small” funds in comparison to something at the time was unfathomable. Why? The economics of a $1B fund (which I still consider huge) only required the VC to product $3–4B in returns at best, which is still insanely hard to do but feasible as they’ve proven. Now that Softbank has “forced” the VCs to basically compete at the highest level for the top deals — something they only did between themselves — the economics are fundamentally changing. A $6B fund now has to return $18-$24B, which has never been done before. Softbank is literally disrupting the venture capital world which is known for disrupting everything else. So where will all this additional liquidity come from? IPOs, traditionally the biggest exit for investors, have been picking up steam recently. Hopefully through the repatriations of hundreds of billions of dollars, M&A will continue to increase too. VCs usually have an ownership thesis of 10–30% of a startup in accordance with their business model. So for a $6B fund that needs to return $20B to their LPs, they will have to create $60-$200B in value over the next decade to be considered a success. It’s entirely possible but anecdotally only one Uber, Snap, Airbnb or Pinterest is created each year, so competition will heat up as the battle for the next big thing begins. Are ICOs and crypto the answer? I don’t think so — they’re just todays trending topic as VCs begin to diversify and find alternative investments that can give them the returns they need. That being said, there is still money to be made there. On I said that I look forward to VCs soon doing more PE style deals through buyouts and restructuring. Now that the VCs are being disrupted, they need to find new models for generating returns — I think it’s entirely plausible that they can acquire entire companies or take others private to significantly increase their ownership stake. twitter Another question is if they will continue with the traditional 2/20 model as well? For a $6B fund, the management fee every year would be ~$120M and assuming they’re successful, they will split billions in returns to all their partners as well. Not too shabby. We do need to remember though that this is a long game. Most funds have a “life” of 10 years, so while it seems crazy today, assuming everything works out meaning it continues going up and to the right, the numbers aren’t as daunting. This is unprecedented territory but I have faith VCs will figure it out. It’s a quality we look for in our founders and something I know these VCs have — not to mention, they’re also so much smarter than me. Now that we understand a little more about how the actual business of venture capital is changing, we now need to figure how it affects the actual businesses they’re investing in. As I mentioned in my , I think pre-seed/seed will stay steady but the deals sizes will increase. These new VC funds will need to deploy more capital and writing $1M checks in seed, even some Series A companies just won’t do it for them. A few of their “scout” programs will pay off — maybe even give a few of their founders some capital to invest in things they like as well. previous post With so much later stage capital that needs to be deployed now, look for a increase in the Series B+ startups that are showing some traction and potential. Unfortunately because of the increased competition, I feel we’ll get a few fighting term sheets as they need to compete over valuations. Back to the days when banks/PE thought they could invest but with smarter capital. Companies are going to stay private longer, a phenomenon we’ve experienced the last few years with so much cheap capital available. Why IPO and face the public markets / just ICO and get free money (kind of a joke). Liquidity will always be an issue, I’m just more concerned about the employees with stock options vested that turn into golden handcuffs. Get ready for herds of unicorns to run wild — we’re going to see a lot more. This isn’t necessarily a bad thing if a lot of the capital goes to things that will actually improve life, work and hopefully the world. It’s great that all this money will be put to work — just please less emojis, LOLcats and avatars… All this capital will basically make them growth stage investors, that want less risk and slightly less return multiples. Why invest $100M in a riskier company for a 5x when we can do $300M for 3x and make more? Or as I mentioned before, taking a larger % of companies as well. Some competition in hiring will occur at the earlier stages as talent who may have joined a startup instead get recruited by the VCs. Startup life is high intensity and very stressful and those who understand it can also be the ideal candidate for the VC world. With these enormous cash infusions, I’ve seen a lot of VCs create huge teams that try to differentiate themselves by providing outsourced work for their portfolio companies. A cost they will have to realize at some point. Also more competition between startups as there is only so much human capital and top talent to go around. Why start a company, get paid less and work harder than working at a growth company backed by top VCs, more resources and liquidity on the horizon? While this may seem negative, I want to make it clear that it’s a good thing. There is so much capital out there sitting around and I truly believe that most of this will be put to good use — funding innovation, hiring professionals, and creating real businesses. There will be some huge losses that look bad, people will question the businesses/founders but that’s just the world we live in. We also have to remember as I mentioned that this is a looooooong game. Most of this capital will be deployed over the coming years, with some being held back for later follow-on as well. I’m not trying to call a bubble but inevitably over the next 10 years there will be a pullback. This will create the perfect environment for smaller investors to come back in at more reasonable valuations. I honestly wouldn’t know what to do with $1B+ dollars as I play in the pre-seed/seed levels where all I would want is $10M+ fund to invest in 20+ startups. A rounding error for them but hopefully a necessary feeder of companies to fill the vacuum created by these mega VCs. Now when these funds are announced in the coming months, you know why and are prepared to talk about them. Good luck!

SoftBank disrupts Venture Capital

From : Tech.eu is to British semiconductor firm , the country’s biggest listed technology company, for a total of £24.3 billion (approximately €29 billion) at £17 per share. The price represents a 43% premium over last week’s closing price. SoftBank acquire ARM ARM is seen as Britain’s most successful tech ventures in history. Based in Cambridge, it designs the microchips that power most every smartphone and tablet on the planet, including Apple’s iPhone. In 2015 alone, ARM’s customers shipped more than 15 billion chips.

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