SoftBank May Slowly Be Starting To Play ‘Offense’ In AI Arms Race After Son’s Promise

SoftBank May Slowly Be Starting To Play ‘Offense’ In AI Arms Race After Son’s Promise

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Three months ago, an emotional Masayoshi Son told investors that SoftBank, the multinational investment holding behemoth he leads, would again shift from “defense mode” as it looks to be a leader in AI.

While that shift to “offense mode” has not been like going from zero to 60, the holdings giant has already placed some select bets on AI, even though it has been a slow go for SoftBank’s famed Vision Fund, according to Crunchbase data.

Just last week, SoftBank and its affiliates led a $280 million funding round for San Francisco-based location-mapping startup Mapbox, which is incorporating AI to push automated driving and safety.

SoftBank’s Vision Fund unit — known for its investment in startups including Uber, WeWork and DoorDash — has been relatively quiet since Son’s announcement, but in July it led a $65 million Series E for Tractable, which is using visual AI to assess, repair and protect cars and homes. 

In addition, The Financial Times reported days ago that SoftBank is considering investing in ChatGPT creator OpenAI or one of its competitors.

Of course that announcement came just about a week after the successful initial public offering of SoftBank-owned U.K. chip designer Arm — arming the firm with even more cash.

Will patience pay off?

Just a little more than a month after Son’s emotional speech, SoftBank’s Vision Fund posted its first gain in six quarters.

However, perhaps surprisingly, the Vision Fund has been part of only five announced deals, including Tractable and Cato Networks’ massive $238 million round led by Lightspeed Venture Partners at a valuation of more than $3 billion announced this week.

Vision Fund 2’s other deals were:

  • Participating in a $20 million for U.K.-based IoT security firm Kigen in July.
  • Participating in a $95 million venture round for Austria-based virtual learning platform GoStudent in August.
  • Taking part in a Series D worth approximately $164 million for U.K.-based CMR Surgical, a surgical robotic system.

In general, Softbank’s Vision Fund is still well off its 2021 highs (which may be a good thing for investors). In 2021, the Vision Fund took part in 175 deals, per Crunchbase data. This year it has taken part in only 13 such deals.

It’s also important to remember the number of deals does not mean the Vision Fund is not investing serious cash, especially when considering the ever-increasing valuations of AI startups. 

One VC, speaking on background to Crunchbase News recently, said he knew of at least one generative AI startup seeking a 90x revenue multiple.

“There is a lot of heartache when it comes to the current multiples in the market,” he said. “The lack of a public comp is huge right now.”

Aside from the Vision Fund, SoftBank also seems willing to invest big bucks from its other affiliates, as it did in the Mapbox deal. Earlier this month, Bloomberg reported SoftBank Group is backing Pittsburgh-based autonomous trucking startup Stack AV with more than $1 billion. The investment is from SoftBank and not the Vision Fund — which had invested in other AV startups in recent years.

SoftBank and the Vision Fund also likely have made other deals in what it hopes will be generational AI startups that will redefine industries that just have not been announced yet. 

While it has not moved at the breakneck investing pace it was on during 2021, perhaps the firm has learned something from that time when significant losses eventually mounted.

SoftBank and its Vision Fund unit seem to be dipping its toes back in the water again — and it’s unlikely it’s forgotten how to swim.

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Illustration: Dom Guzman

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