The Real Deal New York

Real estate represents 17% of America’s GDP so SoftBank is planning accordingly

Backer of WeWork and Compass sees plenty of opportunity in "enormous market"
By E.B. Solomont | July 20, 2018 04:00PM

Masayoshi Son and Justin Wilson (Credit: Wikipedia and LinkedIn)

SoftBank doesn’t want to be called a kingmaker.

At best, the Japanese telecommunications giant sees itself as a prince-maker that is using its $100 billion Vision Fund to back companies like WeWork, Compass, Katerra and others.

But since real estate represents 17 percent of America’s GDP, SoftBank is planning accordingly, with an investment strategy that could be “at least somewhere around that size and scale,” according to Justin Wilson, an operating partner at the company.

Although the Vision Fund didn’t set out to focus on real estate, it was somewhat inevitable given the massive size of the sector, Wilson said Friday, speaking at Inman Connect in San Francisco. While he didn’t explicitly say the Vision would represent $17 billion in real estate, he hinted at it.

“We almost have to be playing in that space given how meaningful it is,” he said. “It’s an enormous market.”

Over the past year, SoftBank has backed real estate-focused startups that include WeWork (with a whopping $4.4 billion), Katerra ($865 million), Compass ($450 million) and Lemonade ($120 million). And in December, Masayoshi Son’s firm paid $3.3 billion in cash to acquire the global asset manager Fortress Investment Group.

Still, Wilson challenged the media’s portrayal of SoftBank as a money tree with little else to offer. “There’s no question that capital is an advantage,” he said. “What we actually think we bring is long-term, patient capital [and] alignment behind founders and entrepreneurs that have hugely disruptive visions.”

The firm also brings a hefty global reach to its portfolio companies. And to be sure, SoftBank is in the venture capital game for its fair share.

“It’s not that we’re going to invest and hold forever, because that model doesn’t work,” Wilson noted. “But we’re very aligned in our vision and mission to support entrepreneurs in backing what they think is the right outcome for the business.”