Barron’s is out with a front page story about the problems at Softbank.
It will be talked about widely, so I might as well chime in.
If you are a Venture Capitalist you have a Softbank story.
They are VC Covid in 2020. Most of their companies needed ventilators after taking their large piles of cash.
It turns out that investing $400 million to $1 billion after meeting an investor for the first time in an Uber is at best momentum investing and at worst not a very good idea. I clipped some implosions listed in Barron’s below:
Twenty years ago Masa made $140 billion from his $20 million investment in Alibaba (golf clap). Those kind of returns get the Saudis excited. It is no wonder he was allowed to spray his money wherever he liked for the last 20 years.
I think the Softbank ‘moment in time’ has now passed.
It was terribly sloppy.
Here is their long term stock chart:
In a post Softbank world it makes sense for seed investors to have a clause in their term sheets called ‘Sloppy Softbank’ which allows seed investors to sell as much or all of their own stock in a round that Softbank participates.
We all need to learn from our mistakes.