SoftBank to invest $100m in former partner’s fund

Venture capital investment updates

SoftBank’s second Vision Fund plans to invest $100m in a new fund started by one of its former top partners, Jeff Housenbold, the latest move by the technology investor as it continues its rapid dealmaking pace.

Housenbold’s new fund, Honor Ventures, aims to raise between $500m and $600m for investments in consumer tech start-ups, according to a presentation viewed by the Financial Times.

SoftBank’s second Vision Fund has committed $100m of the total, said two people briefed on the matter. The fund manages $30bn of SoftBank’s money after failing to raise capital from outside investors.

The commitment adds to a recent streak of investments for SoftBank’s second Vision Fund as it looks to accumulate stakes in dozens of start-ups.

Housenbold oversaw some of the first Vision Fund’s largest US investments, including in the food delivery company DoorDash and the construction start-up Katerra. He exited SoftBank in July and remains an adviser to chief executive Masayoshi Son and the head of the Vision Fund, Rajeev Misra.

Housenbold said he planned to win deals by providing counsel to start-up founders, in contrast to a growing crop of funds that have developed reputations for paying high prices and foregoing board seats at fast-growing companies.

“The CEOs believe I can add more value than just capital,” Housenbold said in an interview. “If it’s just a capital raise, there are plenty of people with much larger funds.”

Venture funds are on pace to set new records for fundraising this year after raising $74.1bn through the first half this year, according to PitchBook data.

The fundraising, along with a series of large public listings last year, has helped fuel a frenzied environment for venture dealmaking that has catapulted dozens of start-ups to billion-dollar valuations at record rates.

Honor would be one of the largest first-time venture funds at its targeted size. The fund plans to invest between $20m and $50m in each deal and accept no more than $1bn in capital, according to the presentation. 

SoftBank and Housenbold declined to comment on the fundraising.

Housenbold’s investment in DoorDash has become one of the Vision Fund’s most profitable since it went public in December last year. The Vision Fund invested a total of $680m in DoorDash, which turned into $11.9bn after the company’s first day of trading.

Other investments have proved less successful. Housenbold oversaw the Vision Fund’s investment in the construction start-up Katerra, which recently filed for bankruptcy in the US following financial and leadership problems. 

The dog-walking app Wag and consumer goods start-ups also struggled and eventually lost money for the Vision Fund, though they were relatively small investments.

Housenbold said he would make the same investments again and pointed to flawed execution at each of the companies.

“It wasn’t about concept or vision — those were actually fantastic,” Housenbold said. “The management team did not execute.”

Housenbold said he sees new opportunities in agriculture tech, digital health, food and several other consumer sectors. He said he has already signed deals in two start-ups that he declined to name, one in ecommerce and the other in used car sales.

Fund managers have an incentive to invest capital, which should keep markets going up in the long term, Housenbold said.

“You’ve got to be long if you believe in continued innovation in society and the American economy,” Housenbold said. “We get paid to deploy capital, not sit on cash.”

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