Colossal SoftBank fund could shake up tech world

SAN FRANCISCO - Japan-based SoftBank is sending tremors through the tech world with a massive new venture capital fund for investing in startups that's expected to dominate the industry so thoroughly it's playfully referred to as a "gorilla."

The Vision Fund's $100 billion coffers nearly equals the total amount pumped into venture capital-backed companies last year, according to market intelligence firm CB Insights, and some say it may be a game-changer for Silicon Valley.

"SoftBank shows a remarkable amount of bravery, confidence and optimism to look to apply this much money in technology," said Bill Maris, who started Google Ventures nearly a decade ago and runs his own California-based investment firm Section 32.

"I can't say it's a wrong bet, if you think the trends in tech will continue in the future. I would be much more worried if SoftBank was saying tech is dead."

Last year, VC-backed firms received $100.8 billion across 8,372 deals around the world, according to CB Insights data.

The huge amount of cash could accelerate the trend where fast-growing startups remain private -- without the scrutiny and transparency of a stock market debut.

Some investors worry that the Vision Fund will buy into startups at high prices, overinflating the market, while crowding out other investors and prolonging the time it takes for young companies to go public.

SoftBank has outlined plans to focus on late-stage investments when startups are more established, and on investments of at least $100 million.

MATCHMAKING

The SoftBank fund is widely expected to pump some $10 billion into ride-sharing giant Uber, which has a whopping valuation near $70 billion. Such a deal would boost the profile of the Japanese group in Silicon Valley.

Maris predicted the venture capital market would adapt to the Vision Fund, and in the end there would be more money available for entrepreneurs.

"I always think more dollars available to innovators and inventors is a good thing," Maris said.

"If it does shake up the market, maybe things do need to be shaken up a little bit."

SoftBank chief executive Masayoshi Son has demonstrated a strategic appreciation for bringing together startups with the potential to benefit one another, according to analyst Patrick Moorhead of Moor Insights & Strategy.

Moorhead added that he was expecting either spectacular wins or failures from the Vision Fund, nothing in between.

"It is looking for mega-investments," he said.

CONSOLIDATION GOALS

SoftBank's early, lucrative, investment in Alibaba was part of a strategy focused on booming e-commerce in China, according to GGV Capital managing partner Hans Tung.

SoftBank's recent investments in ride-sharing firms in various countries fits a pattern of seeking money-making synergies by bringing competitors together to share technology, learnings and more.

"Masayoshi Son understands the value of consolidation," said Tung.

"It is affecting the way society moves from less efficient to more efficient, and the amount of innovation that could happen."

"If consolidation is somewhat expedited with SoftBank money, that is not necessarily a bad thing," Tung said.

He added the caveat that the kind of power that comes with such a large fund could be abused.

"If that money is used correctly, he should do well and do better for society," Tung said of Son.

"We don't need five ride-share companies battling each other."

For example, making industries, financial institutions, and health care more efficient with big investments might be welcomed.

Analyst Moorhead likened Son's style of investing to "matchmaking," targeting diverse companies that could help one another in the future.

Targets for the Vision Fund were expected to include e-commerce, ride-sharing, robotics and machine learning.

SoftBank has shown preference for technology trends with the potential to spread across borders and have significant impact on society, according to those who have tracked the company.

And with all the data collected by ride-sharing, e-commerce and other platforms, investing in artificial intelligence to mine insights from mountains of information makes sense.

"I don't see it impacting the entrepreneurs in the garage; those are typically smaller seed rounds," Moorhead said of the Vision Fund.

Since SoftBank has indicated it will make late-stage investments, its moves could become signals startups are planning to go public.

That strategy also leaves early funding of entrepreneurs to others, but could squeeze the profits of those investors when SoftBank negotiates from a position of strength to buy them out down the road.

"I admire the fact he is doing something visionary, I imagine that is why they call it the Vision Fund," Maris said.

"It is about investing in other people's dreams instead of squirreling the money away for yourself. Someone is making a really optimistic bet on the future."

source: news.abs-cbn.com

Google 'Alphabet' website blocked in China on first day

BEIJING - Tech geeks in China looking to understand Google's newly unveiled corporate structure are out of luck: the website of the new parent company, dubbed Alphabet, was blocked less than 24 hours after going live.

Google unveiled a surprise corporate overhaul Tuesday forming Alphabet, a holding company that will include Internet search and a handful of independent companies, such as the research arm X Lab, investment unit Google Ventures and health and science operations.

So far the website only contains a letter from Google co-founder Larry Page and a link to Google's existing investor relations page.

But the website for Alphabet, www.abc.xyz, is already blocked in China, which operates the world's most extensive and sophisticated Internet censorship system, known as the "Great Firewall".

Despite the block, the announcement of Google's restructuring was widely reported in Chinese official media, including the People's Daily, the official Communist Party mouthpiece.

The Paper, a government-run news website, even named the parent companies' new website address in its report, saying the unorthodox mix of letters "broke with convention".

The California-based tech firm withdrew from China in 2010 over censorship issues, and the two have continued to have a turbulent relationship, with Beijing moving last year to fully block Google's hugely popular Gmail service.

source: www.abs-cbnnews.com

Google reorganizes under 'Alphabet' umbrella

SAN FRANCISCO - Google unveiled a surprise corporate reorganization Monday, forming a new parent company dubbed Alphabet that will include the Internet search unit as one of several entities.

Google chief executive Larry Page announced the change, saying he would hold the same title at Alphabet, the new holding company for the tech giant's newer ventures such as the research arm X Lab, investment unit Google Ventures and health and science operations.

At the search unit Google, the CEO will be current vice president Sundar Pichai.

"Our company is operating well today, but we think we can make it cleaner and more accountable," said a statement from Page, a co-founder of the tech giant with Sergey Brin 11 years ago.

"So we are creating a new company, called Alphabet. I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey, as president."

Page said Alphabet is "mostly a collection of companies," the largest of which is Google.

Under the new structure, "this newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead."

Alphabet will include units focusing on life sciences such as a glucose-sensing contact lens and the health research firm Calico, Page said.

Google X, which handles research on self-driving cars and Internet balloons, will also be a separate unit

Other units to be separated include the drone delivery project Wing, Google Fiber's high-speed Internet, the home automation unit Nest and investment arms of the California technology giant.

"Fundamentally, we believe this allows us more management scale, as we can run things independently that aren't very related," he said.



- Strong leaders, independence -

"Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed."

Alphabet Inc. will replace Google Inc. as the publicly traded entity, and all shares of Google will automatically convert to shares of Alphabet, with all of the same rights, Page said.

Google will become a wholly-owned subsidiary of Alphabet. The Google unit will include search and search ads, maps, apps, YouTube, Android and related technical infrastructure, according to a regulatory filing.

The reorganization comes amid concerns that Google's dominance of the tech sector may have peaked as the landscape evolves.

Google has for years been the leader in Internet search and has turned advertising linked to those searches into a highly lucrative business.

But its shares have struggled since hitting an all-time high in early 2014 and it has little to show for ventures in other areas: self-driving cars, Google Glass, Internet balloons, health care, Google TV, mobile payments, home automation and its Google+ social network, among others.

"This is a pretty assertive move on their part," said Bob O'Donnell, who heads the consultancy TECHnalysis Research.

"There have been a lot of questions about their ability to grow outside of search. Search has been their cash cow for a long time."

The new structure means that each of the projects including "wacky" ones would have to stand on their own and produce results, O'Donnell said.

"There has been a sense they need to be more serious about these things," he told AFP.

Jan Dawson of Jackdaw Research agreed, saying in a tweet, "the biggest question about Google's Alphabet transition is whether we finally get transparency over non-core business finances."

Google shares rallied some 5.6 percent in after-hours trading on the news to $669.08

source: www.abs-cbnnews.com