Reuters
SoftBank CEO Masayoshi Son
- SoftBank Vision Fund's recent investments have attracted a great deal of scrutiny in the aftermath of WeWork's failed IPO, especially after SoftBank Group reported a $6.5 billion loss in the third quarter.
- SoftBank had raised $1.5 billion for SoftBank Capital Partners in 1999, which likely made it the largest late-stage venture fund at the time, according to SoftBank documents.
- SoftBank Capital Partners invested in companies across the web landscape back in the late 1990s and 2000, but when the dotcom market subsequently crashed, the fund and other SoftBank investments came close to being wiped out.
- "Serious doubts" were beginning about SoftBank's "increasingly chaotic" Internet empire, the Economist wrote back in March 2000.
- Here's a look at companies that SoftBank Capital Partners plowed its money into and how they ended up.
- Visit Business Insider's homepage for more stories.
SoftBank has made news in recent months as a series of investments, from WeWork to Uber to Wag.com, have soured, raising questions about its strategy to plow massive amounts of money into startups and anoint them the winners of their industry.
The approach is the hallmark of the company's Vision Fund, a $100 billion investment vehicle raised in 2017 from backers including Saudi Arabia, Abu Dhabi, SoftBank corporate, and other firms.
But what many people may forget - or not even know - is that SoftBank pursued a similar venture strategy 20 years ago with disastrous results.
In what could have been called the Vision Fund of its day, SoftBank raised $1.2 billion for SoftBank Capital Partners in July 1999 to make late-stage investments in promising tech companies.
Controlled by SoftBank, the fund raised money from limited partners including the state of Michigan and French media company Vivendi. SoftBank pledged $720 million of the total and founder Masayoshi Son was one of just a few partners.
Son would reserve a hotel suite in California - preferring the Fairmont San Jose or the Ritz-Carlton San Francisco, or sometimes the Mandarin Oriental - and host a series of meetings with startup founders that the fund, or other SoftBank units, were thinking of backing, according to a former SoftBank employee.
The investment vehicle may have been the largest late-stage fund in history, eventually swelling to $1.5 billion, according to a 53-page factbook that SoftBank published in 2001.
Benchmark Capital, which invested in WeWork alongside the Vision Fund, raised a $1 billion fund around the same time, according to the Wall Street Journal.
As SoftBank Capital Partners ran around Silicon Valley writing checks of $50 million to $150 million, it received many of the same criticisms the Vision Fund has gotten recently. The fund took stakes seemingly unconcerned about valuation or the disruption it brought to the Silicon Valley order, according to news reports at the time.
The plan then, as it has been with the Vision Fund, was to raise similarly-sized funds every year or two. SoftBank Technology Ventures VI launched the following year with a similar amount of money, but that was one of a series of funds focused on early-stage investments. SoftBank is already raising funds for a second Vision Fund, though the troubles of the first may make that more difficult.
SoftBank Capital Partners returned pennies on the dollar to its limited partners if you track the investments. SoftBank's 2001 factbook stated that some of the "broad range of late-stage start-ups" in which it had invested "are not performing well because of the current market conditions."
It was a tough time across the industry. The Nasdaq, where many of the early tech firms listed shares, fell nearly 80% from March 2000 to October 2002. Venture capitalists industrywide lost a net 17.6% in 2001 and 33.7% in 2002, according to Cambridge Associates.
Here is a list of 14 of the investments made by SoftBank Capital Partners, seven of which ultimately collapsed. To be sure, some names like 1-800-Flowers emerged on the other side of the crash.
A SoftBank spokesman declined to comment.