The right hand man behind some of the largest recent investments into Silicon Valley tech startups has been Masayoshi Son, the founder & CEO of Japanese conglomerate SoftBank. Through vehicles like the $100 billion Vision Fund, SoftBank and its controversial leader Son have flooded young tech firms with unprecedented amounts of cash. Another major player shaping investments has been Tiger Global Management, the tech-focused New York hedge fund pouring billions into hot startups. Both massive funds have transformed startup investment norms.
Vision Fund backed by Saudi money disrupts venture capital industry
The SoftBank Vision Fund launched in 2017 with nearly $100 billion in capital, far beyond normal VC fundraising levels. The outsized fund is bankrolled by Saudi Arabia’s Public Investment Fund, as well as Apple, Abu Dhabi investors and SoftBank itself. Typical VCs have struggled to compete with Vision Fund’s ability to write enormous checks to founders and pressure startups to take offers. Beyond driving up startup valuations across sectors, the fund’s non-traditional approach has shaken up the Silicon Valley investment landscape.
Tiger Global moves fast with data-driven startup targeting
While controversial due to its breakneck pace and sky-high pricing, New York hedge fund Tiger Global has made over 350 investments into tech startups and counts top unicorns like Stripe in its portfolio. Unlike SoftBank’s founder-driven model, Tiger Global takes a metrics-based approach to swiftly identify up-and-coming startups worldwide. The fund then acts decisively to flood these startups with cash before competitors have a chance. Tiger Global’s systematic targeting has made it a feared player in Silicon Valley dealmaking.
SoftBank & Tiger Global compress fundraising timetables
SoftBank and Tiger Global have used their enormous funds and name recognition to upend normal VC timetables. Entrepreneurs know they can get a funding decision in days rather than months by dealing with these giants. The accelerated pace of investments has increased pressures across the startup investing ecosystem. Many traditional VC firms are scrambling to raise bigger funds and hire more partners just to remain competitive.
Outsized impact on startup survival & competition
The billions invested by SoftBank’s Vision Fund and Tiger Global don’t just inflate valuations. They also allow startups to operate at huge scale before having a proven business model. However, this flood of capital creates intense competition between backed startups in sectors like ridesharing and real estate. Vision Fund head Son even pushes for portfolio companies to merge. So the mega-funds shape both the startup landscape and competition in Silicon Valley.
Through vehicles like SoftBank’s $100 billion Vision Fund, Masayoshi Son and Tiger Global have wielded outsized influence on startup investments compared to traditional VC firms. Their flood of capital into young tech firms has transformed everything from valuations, diligence processes and investment timetables to startup strategy and competitive dynamics across sectors. Despite recent setbacks, these mega-funds will leave an enduring mark on Silicon Valley dealmaking.