The Business of Venture Capital, 3rd Edition

1The Business of Cash and Carry

INTRODUCTION: AN OPERATIONAL PRIMER

For Masayoshi Son, raising a $100 billion Softbank Vision fund was easy. As he quips, it was “$45 billion in 45 minutes” — his 45-minute meeting with Saudi Arabia's crown prince kicked off the fund raise. To the prince, Masa offered a gift. “I want to give you a Masa gift, the Tokyo gift, a $1 trillion gift. Here's how I can give you a $1 trillion gift: You invest $100 billion in my fund, I give you a trillion.” Son left the meeting with a commitment of $45 billion, and other investors followed soon thereafter. The world's largest venture fund was off to the races.

But if raising $100 billion was that easy, the doyens of Sand Hill Road venture firms would have done it long ago. For Softbank, the journey started in the year 2000, with a $20 million investment in Alibaba, a startup that would eventually grow into a Chinese e-commerce giant. Alibaba went public in 2014, and at that time, Softbank's 28 percent stake in the company was valued at $58 billion. Son had also invested in Yahoo! in 1996 and reaped its rewards, following the company's IPO four years later. Son's fascination with the world of technology started with the microprocessor. “When I was 17 years old, the very first time I saw a photo of a microprocessor, it made me cry. I was overwhelmed,” he would say. As the waves of innovation rose and fell, the teeny microprocessor spawned into the World Wide Web in the 1990s, followed by the cloud and mobility ...