After about a year of essentially sitting on the sidelines, SoftBank Group—once notorious for writing enormous checks at rapid speeds—is crawling back into the ring.
“We’ve been carefully restarting our investment activities,” CFO Yoshimitsu Goto said on SoftBank’s earnings call from Minato, Tokyo yesterday, noting that—for the first time in six quarters—SoftBank’s Vision Funds had reported a net investment gain, rather than a loss. But SoftBank executives are favoring words like “slow” and “careful” as they come back into market. And they made something very clear on the call: Their investors are only looking at A.I. deals right now.
“The bar for investing is very high,” managing partner Navneet Govil said. “There has to be investments that meet our targeted threshold and they have to be companies that are focused on next-generation A.I. with high growth potential.”
That directive is coming down from the top at SoftBank—from infamous tech investor Masayoshi Son, who has made a name for himself writing enormous checks, sometimes with no due diligence. As Goto said on the call: “[Masayoshi is] very much focused and dedicated [to] A.I. business: What can we do? What should we do? That’s something that he is thinking around the clock—24/7.”
SoftBank’s investment team is likely hoping A.I. can give its portfolio the pick-me-up it sorely needs. The Tokyo-based investor, which raised a $100 billion fund from Saudi Arabia, Abu Dhabi, and others six years ago and started deploying unprecedented piles of cash into companies like WeWork and Uber, has been entirely battered in recent years as valuations for some of its most important portfolio companies deflated.
SoftBank reported yesterday that, as of the end of June, 343 of its portfolio companies had deteriorated in value (112 companies have grown in value). Even with improvement this quarter, the firm has reported cumulative losses of $6.3 billion across its two Vision Funds and Latin American funds. And, within the last 12 months, there have been two layoff events—the latest taking place this past quarter.
Executives acknowledged the difficult past few quarters but stated they believed things were starting to turn around. In the last three months, SoftBank has made $1.8 billion in new investments, exceeding its activity from the last three quarters combined. Goto brought up chipmaker Arm’s impending IPO on several occasions, noting that “I believe that Arm will contribute to Vision Fund 1 a lot” and said there are “a lot of companies” in its portfolio that can be listed on the public markets.
Over the last three years, SoftBank Vision Fund 2, which has no outside LPs, has reported cumulative investment losses of $19.2 billion. SoftBank’s first fund, Vision Fund 1, has been faring better, with more than $14 billion in investment gains.
But SoftBank has seemed to have learned its lesson about one thing. While moving quickly was once core to its investing philosophy, no longer.
Goto specifically stated that, three years ago, SoftBank’s investment committee discussion was “probably focusing on speed.”
And this year? “Focusing on A.I. is something that we value this time,” he said.
The venture capital affirmative action fight…As mentioned in one of last week’s Term Sheet editions, American Alliance for Equal Rights—the conservative activist group behind the recent Supreme Court case over affirmative action at colleges and universities—filed a racial discrimination lawsuit last week against the women of color-focused early-stage VC firm Fearless Fund. My colleague Emma Hinchliffe dived into the case and its broader implications in yesterday’s edition of The Broadsheet, Fortune’s newsletter covering the most powerful women in business. You can read it here.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
- Neuralink, a Fremont, Calif.-based brain-implant company founded by Elon Musk, raised $280 million in funding led by Founders Fund.
- Simon Data, a New York-based customer data platform, raised $54 million in Series D funding. Macquarie Capital led the round and was joined by Polaris, .406, and F-Prime.
- Daybreak Health, a San Francisco-based mental health services platform, raised $13 million in Series B funding. Union Square Ventures led the round and was joined by Lux Capital, Lightspeed Venture Partners, Maven Ventures, and Y Combinator.
- ConductorOne, a Portland-based identity security platform, raised $12 million in funding led by Felicis.
- Catch+Release, a San Francisco-based content licensing marketplace for brands and creators, raised an additional $8.8 million in Series A funding. Accel led the round and was joined by Cervin, Stagwell, HarbourVest Partners, and others.
- DotBio, a Singapore-based intracellular antibodies biotech developer for cancer, raised $5.6 million in pre-Series A funding co-led by Proxima Ventures, Gaorong Capital, and AIM-HI Accelerator Fund.
- Gomboc.ai, a New York-based cloud infrastructure remediation platform, raised $5.2 million in seed funding co-led by Glilot Capital and Hetz Ventures.
- Flo Recruit, an Austin-based legal recruitment software company, raised $4.2 million in seed funding. LiveOak Venture Partners and Moneta Ventures co-led the round and were joined by Tau Ventures and Alumni Ventures.
- Dropzone AI, a Seattle-based autonomous alert investigation platform for security operations teams, raised $3.5 million in seed funding. Decibel Partners led the round and was joined by Pioneer Square Ventures Fund and other angels.
PRIVATE EQUITY
- GTCR agreed to acquire ADT’s Commercial fire and security business from ADT. The deal values the company at approximately $1.6 billion.
- Advent International agreed to acquire a majority stake in ZIMMERMANN, a Sydney, Australia-based luxury fashion brand. Financial terms were not disclosed.
- ToxStrategies, a portfolio company of Renovus Capital Partners, acquired Modality Solutions, a Houston-based biopharmaceutical cold chain business. Financial terms were not disclosed.
OTHER
- LeaseQuery acquired Stackshine, a remote-based SaaS spend management platform. Financial terms were not disclosed.
- Rubrik agreed to acquire Laminar, a Tel Aviv-based data security posture management platform. Financial terms were not disclosed.
PEOPLE
- Converge VC, a Cambridge, Mass.-based venture capital firm, hired Anshu Agarwal as general partner. Formerly, she was with Nimbella.
- Valor Capital Group, a New York- and São Paulo-based venture capital and growth equity firm, hired Paulo Passoni as a managing partner. Formerly, he was with SoftBank.
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