What The Massive SoftBank Investment 'Vision Fund' Means For Tech

SoftBank Group Corp SFTBF’s founder and CEO Masayoshi Son plans to make his childhood dreams come true after securing an unparalleled $92 billion in funding for his vision fund.

On Monday, SoftBank officially closed the first round of its investment funding, securing investments from Saudi Arabia, Abu Dhabi, Apple Inc. AAPL and QUALCOMM, Inc. QCOM. The vision fund is focused on the future of artificial intelligence and the integration between humans and computers.

The Importance Of AI

AI brings together a multitude of different technologies that enables machines to act like and learn from humans.

Recently, according to a report from Accenture, there has been a decline in the investment needed to propel production that would enable AI to spur economic growth. However, Son’s fund demonstrates that individuals are still looking to invest in this undeveloped industry full of endless possibilities.

“AI could double annual economic growth rates in 2035 by changing the nature of work and creating a new relationship between man and machine,” according to Accenture’s report.

The $100 Billion Investment Fund

Currently, the private equity industry is larger than ever, and PE funds are holding a record amount cash according to a research report from Preqin. These firms were holding $820 billion in dry powder at the end of 2016, up from $755 billion at the end of 2015.

Felicio Egidio, Preqin’s head of venture capital, told Bloomberg, “There is already a tremendous amount of dry powder out there. Investment opportunities are getting harder and harder to come by.”

Additionally, as oil prices are falling, Saudi Arabia is looking to diversify its investments beyond oil. Thus, the country decided to invest a reported $45 billion in AI in Son's fund.

It is also easy to see with the ongoing race to build and develop autonomous vehicles, a multibillion-dollar industry, SoftBank will now be able to be a very key player in this race. SoftBank has already invested over $1 billion in Didi Chuxing (a major ride-sharing company in China), hoping to own a large piece of the driverless world.

Why Investors Trust Son

Son has been proclaimed as one of the craziest yet brightest individuals in the world, as he envisions a society where the average human life expectancy exceeds 200 years.

Son has spent his entire life working to defy the impossible and made his first million before he was even 16 years old.

While he hasn’t always been a winner, as he lost nearly $70 billion investing during the internet bubble, his vision has never been clouded. Since the loss, he has continued to invest and cut huge deals. Most recently, he bought chip designer Arm Holdings plc (ADR) for $32 billion.

In his keynote at ARM TechCon in 2016, Son said, “The biggest theme in my view is the Singularity. For that vision, I am exercising that strategy. $100 billion is an interesting size of ammunition. In my view, that is the beginning. My passion is bigger than many people think.”

What Makes Vision Fund So Unique?

Son’s investment fund presents him with endless opportunities to develop AI, David Brophy, a finance professor and the director of the University of Michigan’s Office for the Study of Private Equity Finance told Bloomberg. The billions of dollars will provide him with access and opportunities to keep funding his projects and form key partnerships.

“You can walk in with muscle that no one else has. I wouldn’t focus too much on what we see in the rear-view mirror. It’s more important to look ahead,” said Brophy.

According to Brophy, Son now has the capability to invest loads of capital into AI. This will inflate valuations which will drive out competitors, who will now no longer be able to afford to invest in AI.

SoftBank’s ability to secure funding illustrates that technology investors finally believe in AI and expect it to be fully integrated into our lives soon. Son concluded his keynote by stating, “In the next 30 years, AI will overtake human intelligence."