A week ago, SoftBank Group Corp.’s Masayoshi Son was talking about walking away from his planned Uber investment.
Son said he may instead invest in Uber Technologies Inc.’s biggest rival, Lyft Inc. If both stocks were publicly traded, one could imagine Uber plummeting, and Lyft rising.
Most people saw those comments for what they were: a negotiating ploy by Son to force Uber’s hand. Kudos to the Japanese billionaire, though, because it worked. Now SoftBank and others get their sought-after $1 billion stake, with an option to buy another $9 billion from existing shareholders.
It was a long and torturous negotiation that involved Uber founder and former chief Travis Kalanick, among others, as Bloomberg’s Eric Newcomer outlines. As various dissections of the sale are done over coming weeks, it’s important to remember one thing: This whole transaction couldn’t have been done without Son, his huge appetite and the billions of dollars at his fingertips.
With Uber’s $68 billion valuation in doubt, Son is playing unicorn veterinarian. Few others would be brave enough to prop that up, and there’s little chance existing shareholders (including staff) will
be able to exit now at a price
anywhere near that level.
Son has established himself as the saviour of overpriced start-ups. It’s not his own money, of course, rather funds given to him by governments, cash-rich technology firms and shareholders of his own publicly listed telecom group.
At the same time, any trepidation Silicon Valley VCs have towards SoftBank’s Vision Fund sucking up the best opportunities, and raising prices, can be mitigated. Instead of being the over-funded Goliath bidding up the cost of new investments, venture capitalists can look to the Vision Fund as a lucrative exit strategy for when traditional channels like IPOs or M&A don’t pan out.
In nabbing this deal, Son has a hand in four of the world’s 11 largest start-ups, according to data compiled by CB Insights, including Uber’s Chinese rival and former foe Didi Chuxing. And he has another $90 billion to deploy in big, expensive world-changing ventures.
Investors in those remaining highly priced companies should start making calls to Tokyo. After all, it’s not like Son is short of