The Real Deal New York

Trying to get VC money from SoftBank? Here’s what you need to know about Masayoshi Son’s strategy

First, get familiar with the Japanese concept of keiretsu
August 05, 2018 11:01AM

Masayoshi Son. (Credit: nobihaya/Wikimedia Commons, Pixabay)

Startups backed by Japanese billionaire Masayoshi Son’s Vision Fund are reporting back on what it’s like to be part of the SoftBank “family” and there’s a few key takeaways.

First, be prepared for last-minute trips to Japan to meet the SoftBank Group chairman and CEO in person. Founders recounted to CNBC that they received sudden calls with the same message: “Masa wants to see you tomorrow.”

Next, the Japanese concept of keiretsu seems to be one of the best descriptors of Son’s strategy for the startups he invests in. Keiretsu refers to companies taking stakes in one another as part of long-term planning strategy. Similarly, Son encourages companies with Vision Fund backing to work together on deals to help each other grow. In some cases, CNBC found that’s meant SoftBank-backed startups have completely changed their core competencies.

Son also tends to ask for a large stake in companies. He aims for 15 percent, but has been known to get up to 30 percent.

Michael Marks, the founder of construction startup Katerra, was resistant to Son’s 15 percent request, but, after caving to Son’s ask–and landing a $865 million funding round this year–Marks claimed to see the light: “It’s a part of their strategy,” he told CNBC. “We’ll come in with enough money that the customers, suppliers and competitors will know that this is the best company — that this is the company that will win the industry.”

Marks described some of Katerra’s clients seeming more at ease following SoftBank’s investment.

Though the Vision Fund is now officially closed, Son has already promised another billion-dollar fund is in the works. Real estate tech has become one of the sought-after investments among venture firms with SoftBank’s backing of companies like WeWork, Compass and Reonomy to the tune of millions (sometimes billions) seen as a “complete game changer,” as The Real Deal reported. [CNBC]