One upfront remark: I do not recommend to invest in Venture Capital right now. The market is clearly overheated and the asset class is known to be very volatile although Warren Buffett’s Todd Combs seems to just have discovered Fintechs.
This post is ment as a “long-term perspective” view on the sector and not a buy recommendation in the current environment.
How to invest into Venture Capital as a Private Investor
Famous VC funds
Venture Capital, i.e. the industry funding (technology) start-ups is known that almost everything depends on relationships.
It is no secret that a few funds like Sequoia or Kleiner Perkins have produced outstanding returns but these funds are “invitation only”, there are little chances even for larger institutions to invest in them and for individuals without direct connections it is more or less impossible to get in.
As I have covered Softbank just recently (part 1, part 2 ) and as I consider Insurance companies to be somehow in my circle of competence, the news that Softbank wants to acquire 30% of Swiss Re for 10 bn USD of course sparked my interest.
The big question of course is: Why on earth would Masa Son do that ?
Looking at his vision statements, his vision is a connected world via the internet of things, lots of robots, smart AIs and a lot of computing power. So he is buying chip makers (ARM; Nvidia), data companies like Uber, mobile phone companies, robotic companies etc. So far so good, somehow this could fit together.
But a Reinsurance company ? WTF is that ?
A couple of days ago, I looked at Softbank more from a strategic point of view. This time I want to focus more on the actual assets and a sum-of-parts valuation
What is Softbank ?
Essentially the company at its core is a Telco company in Japan and US plus a lot of “extra assets” like the Alibaba stake, Yahoo Japan and then all the other stuff including the vision fund. The initial Software distribution business (this is where the name Softbank comes from) doesn’t play a big role anymore.
I will now try to walk through the major Softbank Assets in more detail:
- The Alibaba stake
Let’s start with the largest position first, the now so famous Alibaba stake. From a technical perspective, Softbank doesn’t own the listed shares but this:
In the comments to my Kinnevik post some weeks ago, a reader recommended me to have a look at Softbank, the famous Tech conglomerate built by Masa Son. Well sometimes I indeed take suggestions…..
Masa Son – Founder and “Godfather”
In Softbank’s case it makes sense to start with its founder, CEO and major shareholder (21%) Masayoshi (“Masa”) Son.