Despite a series of setbacks amongst other Vision Fund-backed bets, one particular wager is chugging along as if the market was unchanged from earlier in the year. , a richly-backed food delivery startup may raise $100 million more from at a valuation as “nearly $13 billion.”

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That number makes sense as the company’s last round, from , the , , and others, valued the company at $12 billion before the investment and $12.6 billion after. If the $100 million values the firm at around $13 billion, we can safely presume that DoorDash is worth about the same per-share as it was before; DoorDash is likely selling more equity at around the same price as its May Series G.

DoorDash has proven to be a fundraising juggernaut in recent years. From , DoorDash raised , along with that same year. Our current annum brought more investment, with DoorDash picking up along with the previously-mentioned $600 million Series G.

If the new, $100 million investment gets named, it will be a Series H. It may be considered an extension of the company’s Series G.

Context

The round affirms that another investing group is willing to pay DoorDash’s prior valuation, good news for SoftBank, who has put lots of capital into the company since its Series D. But DoorDash’s continued funding success comes at an interesting time.

In the wake of WeWork’s implosion, there has been a sentiment shift (more here) of sorts away from quick growth powered by large deficits to perhaps slower growth but coupled to a quicker path to profitability.

Valuations have also been questioned, as companies that have been anointed as unicorns with high valuations while private have struggled to perform to that same level as public companies. It could be a smart move by DoorDash to stay valued at the same amount it was at before. Should the company go public, it would be easier to maintain the valuation it had while it was private if that valuation isn’t astronomically high.

Investors seem to like DoorDash (otherwise they wouldn’t be giving it so much money), but DoorDash is in a crowded space. There are multiple high-profile, well-funded food delivery startups out there. Refraining from boosting DoorDash’s valuation is probably wise.

滨濒濒耻蝉迟谤补迟颈辞苍:听

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As (WeWork) stumbles towards an IPO at a price far under its final private valuation, its leading investor is considering working to remove its CEO. The possible reduction in the internal authority of , prior media darling and now international business pariah, is the biggest news of the weekend.

But there’s more going on at , a key WeWork backer, that I wanted to highlight. More precisely, it seems that the investment group has made some mispriced bets in recent years. Let’s talk valuations for a minute.

Down

The , observing that several SoftBank Vision Fund investments were either giving up gains or, in fact, losing money for their famous investor.

It appears that SoftBank CEO is underwater on his bet, and his various wagers into are losing altitude as well. The Journal goes on to note that the Vision Fund’s investment into has lost value as well, “potentially requiring [the deal] to be marked down.”

It’s not hard, therefore, to look at the most valuable Vision Fund deals and spy weakness. I want to extend the point today by reminding ourselves of a few other deals that the Vision Fund took part in that I reckon are also underwater.

To jog your memory, three Vision Fund deals quickly came to mind this morning when I tried to recall what felt like the group’s least conservative bets:

• $300 million from the Vision Fund. Wag provides pet walking services in urban environments.
• $375 million from the Vision Fund. Zume makes food on the go through robotic methods.
• $240 million led by the Vision Fund. Brandless offers low-cost goods at a flat price point through its own digital store.

Since then, , , and I never had much hope that was going to wind up being the near-term future.

Naturally, these are just a handful of deals from a huge investment bucket. There will be winners in the Vision Fund 1 — , , , perhaps — to offset other losses. But there are also some investments like WeWork and Zume that are more head-scratchers than wagers we understand.

What appears clear, however, is that a good chunk of the first Vision Fund’s deal makeup was either mispriced, fed too much capital, or both. That is not a recipe for success. But don’t trust your friendly local tech blogger. Listen to investor earlier this year:

I think the mentality of throwing money at companies and making them successful just doesn鈥檛 work. I鈥檝e never seen real examples of just, you take money and you crown a winner. That鈥檚 the philosophy, which I don鈥檛 believe that works. I think that鈥檚 the whole history of Silicon Valley, is that these upstarts with very limited resources and a bunch of misfits have rearranged every single industry, and they鈥檝e done it over and over again.

Capping it all off, the Vision Fund is a “Valuations Director.” 2019.

滨濒濒耻蝉迟谤补迟颈辞苍:听.

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is an underappreciated venture capital story. Its recent ability to attract private capital at ever-higher valuations is truly impressive. Regardless of how you feel about the company (its have come under moral fire in recent months), the following list is something to behold:

• March 2018: DoorDash raises led by at a $1.4 billion post-money valuation.
• August 2018: DoorDash raises led by and at a roughly $4 billion post-money valuation.
• February 2019: DoorDash raises at a $7.1 billion post-money valuation led by and (I recently interviewed Tamasek about its investment performance, and when I get a chance I’ll write up my notes.)
• May 2019: DoorDash raises at a $12.6 billion post-money valuation.

A list to which we can now add another entry before the company looks to go public. According :

, the app-based food-delivery service, is in talks with banks about arranging a credit facility of about $400 million ahead of a possible initial public offering, according to people with knowledge of the matter.

As the youth of today would say, “tfw u need another $400 million after raising $1.25 billion in 12 months.” To which I would respond “big mood.”

DoorDash is not alone in seeking pre-IPO credit, of course. , another private capital success story (from a fundraising perspective at least), is raising more credit ahead of its own IPO. In WeWork’s case, the company is widely considered to seek extra funds ahead of its offering to limit the number of shares it will need to sell — and thus limit dilution — to fund its growth.

No one presumes that DoorDash is profitable, but looking for pre-IPO credit groups it slightly closer to WeWork than I would have reckoned, a company that has proven famously unprofitable at times. Debt can be useful. Given a low-rate global climate, borrowing capital can be a cheaper way to access funds when contrasted to equity-fundraising. Though DoorDash hasn’t been shy on that front, as we’ve already seen.

On-Demand Losses

I’m waiting on the day when one of the on-demand companies can make money at scale. On-demand ride companies have proven their ability to grow, but not their capability to generate either positive cash flow or even adjusted profit. And on-demand delivery companies are in a similar boat.

There is an end to private capital being easy to access. I don’t know when that day will come, and neither do you, but at some point all these firms that we’ve covered in a positive light will need to generate their own capital with which they can self-finance. And as we saw this week, companies that do have a path to profitability will be rewarded. And those that have a more difficult path to the black will be dinged.

In the case of DoorDash, it’s still in hypergrowth I reckon. It’s what comes next for the business that I’m more curious about.

Illustration: .

After indicating that the could be only the first of similar capital vehicles, it seems that dream of having more than one enormous investment fund is inching closer to reality. News had swirled that SoftBank was struggling to raise the money it needed to fill the coffers of a new Vision Fund, a tall challenge after the first installment raised around $100 billion over time.

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According , the investor list for what we’ve decided to call the Vision Fund II, include SoftBank itself (), (an active investor in its own right), and , which is a slightly odd cookie in the mix.

Microsoft has a somewhat atypical history as an investor, or, as an LP if it invests in Vision Fund II. Recall that Microsoft’s early venture efforts included , which later molted into a . Now Microsoft’s cuts checks, though it did take a while to get to the decision of taking equity stakes in smaller companies.

(Back in my Microsoft-covering days, Microsoft’s lack of venture activity was explained by Redmond staffers as an acknowledgment of the fact that VC deals wouldn’t impact its balance sheet in a material way.)

To see Microsoft written down as a potential LP for the new Vision Fund is notable. After all, Microsoft . Since then it’s been at war with the smaller company through its competing Teams product. In the meantime, the first Vision Fund invested in Slack, which is now a public company.

It feels gently odd to see Microsoft commit some billions of dollars to a vehicle so that it can get micro-stakes in certain businesses that it wouldn’t buy outright; I understand Microsoft investing on its own to purchase minority stakes as it can learn from those companies, and could secure board seats. An LP relationship is different, more remote.

There’s one final wrinkle to the possible deal that we should raise that could help us understand Microsoft’s interest. Here’s :

SoftBank executives told Microsoft they would encourage the fund鈥檚 roughly 75 companies to shift from听听Inc.鈥檚 cloud platform to Microsoft鈥檚, some of the people said. A Microsoft spokesman declined to comment.

Perhaps SoftBank could convince a minority of its investees to spend a minority of their marginal cloud spend on Azure, but I can’t imagine any company of scale switching clouds so that one of their investors could possibly raise funds from a particular LP. ( recently , showing that Microsoft’s Azure isn’t doing well among the user cohort, as a data point.)

So we’ll see. But Microsoft has its own venture arm, global operations, and checkbook for buys. What it gets out of being a Vision Fund II LP isn’t as clear as, say, what gets out of the deal; for the latter, petroleum incomes can be recycled through the Vision Fund, allowing the monarchy to reap returns on the liquid capital that supports .

Regardless, the Vision Fund II is being actively compiled. And if it does find enough capital to launch, we won’t have to wonder anymore what the world will be like without the Vision Fund’s epic checks.

PS. What I can’t get away from when considering a second Vision Fund is that it will push more capital into private companies, allowing them to hold off public offerings even longer. This, as even WeWork is racing to get public before the good times on the public markets end. Either SoftBank is right, to some degree, or WeWork is. That SoftBank owns bunches of WeWork makes for a slightly ironic moment. Surely it would be better to get some more unicorns public instead of doubling-down on crowning more startups with billion-dollar checks?

Illustration: .

Recent headlines describe a world that might never see a Vision Fund II. The over the weekend, for example, that “SoftBank Faces Challenges Raising Latest $100 Billion Fund.” The that “Masa Finds Not Everyone Shares His Vision.” And so on.

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What matters for tech shops, startups, and unicorns alike is that instead of their being an eventual Brady Bunch of Vision Funds, vision-ing around the world like buzzy, cash-laden drones, the franchise might halt after its first installment.

The $100 billion-ish vehicle has caused disturbances of all sorts in the fabric of the private capital markets, deploying cash with hurricane speed. Checks into companies of all sorts have come from the epic capital pool, sourced in large part from theocratic monarchies. (As we learned from SoFi last week, this is de rigueur.)

But as the Vision Fund’s aggression has kept the media enthralled, and founders’ hopes alive, troubles have circled. According , raising money from Vision Fund I backers has proved tough:

But several of these [prior] investors plan to make limited or no contributions, people familiar with the matter said. They include Canada Pension Plan Investment Board and Saudi Arabia鈥檚 Public Investment Fund, whose $45 billion check made it the largest backer of SoftBank鈥檚 first tech fund, known as the Vision Fund.

You can read this two ways. First, that quite a lot of private capital is going to sit out the late-stage market. Or, second, that that same capital is instead going to put itself to work. The Journal continues:

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Big news out in the last 24 hours indicates that the great Vision Fund boom may not be close to done. In fact, SoftBank said this week that it intends to double its investing staff from 400 to 800, and it may raise a second fund.

The personnel news () is notable. But the news concerning the second fund is even more eye-opening. Here’s how :

He also dropped more news around its plans to start fundraising for a second investment vehicle that will be “the same size” as its $100 billion Vision Fund. “We will hopefully start raising our second fund in the next few months,” [the CEO of the Vision Fund Rajeev Misra] said at the Milken Institute conference in California.

If a second Vision Fund, call it the Vision Fund II, is created, and it is the same size as its predecessor, we’re going to run into an interesting confluence of trends. Notably, however, the two trends are in contrast to one another.

Here are some things that are still mostly true:

• Highly-valued technology companies are waiting longer to go public than in prior decades. Ample private capital has fueled many private tech shops well past normal, private market size. SoftBank and its Vision Fund have invested in a chunk of these companies.
• Some of the largest companies built during the current technology cycle are racing to go public while conditions appear favorable. SoftBank and its Vision Fund have invested in a chunk of these companies.

I can’t help but expect there to be some tension between the diverging trends over time: If SoftBank wants to invest another $100 billion into private technology companies, those firms will have huge amounts of cash on their balance sheets, allowing them to stay private longer. At the same time, there’s a growing push among tech shops to get public now while they can. And the Vision Fund must appreciate liquidity, as it will have hundreds of billions of dollars behind it that are often .

Is a Vision Fund II a bet, therefore, that the current liquidity thaw is not going to last? It’s gamble that a lot of unicorns won’t go public in today’s open IPO window鈥攅ither because they are unwilling or unable to do so鈥攅ven though the market is currently welcoming unprofitable companies. Are those companies expecting better options in 12 or 24 months down the road?

Or perhaps the Vision Fund II is merely a bet on the status quo of most unicorns staying private and growing while grazing on private funds raised in nine-figure chunks? That the unicorn phenomenon is no fluke, but the new normal? In that world, the Vision Fund II might do well, provided that public market investors and larger public companies are willing to pick off enough independent tech shops of scale to keep sufficient returns coming in.

The Vision Fund impact has been huge to date. We learned just this week that the fund and its parent firm are putting $1 billion into a Colombian company (spreading capital more widely? check) and quietly put money into Slack ahead of its IPO ().t

Can $100 billion more defer gravity for a few years for the whole tech market? Or would the new bet hit the felt even as the hot streak cools?

Illustration: .

There’s no shortage of car-selling websites and online services in the world. In America, CarGurus is a well-known entrant and member of the听2017 IPO听class. But while there’s 听and even听, there’s still a huge market to tackle, and thus lots of capital flowing into companies out to do just that.

China

The Chinese car market is massive. Despite hitting along with the broader Chinese economy, the figures concerning automobiles in China are nearly bonkers. The country had annual car sales in 2018, for example, compared to during the same period.

Strong national car sales mean lots of new cars on the market听of course, but also lots of used cars. It appears that Chehaoduo targets both sides of the car market. The firm, now with ten-figures worth of cash on its balance sheet, operates two services including which targets new car sales, and Guazi, which seems to operate in selling used car.

In , SoftBank waxed excitedly about the Chinese used car market and thus the chances for its latest investment:

China’s听used car market is growing rapidly but online penetration remains low and auto financing is underutilized compared to developed markets. In just three years, Chehaoduo Group, through the Guazi brand, has leveraged the latest innovations in data-driven technology to establish听China’s听leading car trading platform. The company has a bold vision with technology at its center to underpin an industry network that will support transformative growth of the market.

Even for tech that’s a bit air-filled, but I think the point is that Chehaoduo’s implied quick growth in a big market attracted Vision Fund dollars. In that sense, the deal matches what we’ve seen recently from the ever-active SoftBank-managed capital pool.

The Vision Fund doesn’t have infinite money (perhaps a few dozen billion dollars left), but until its monetary pool dries we’ll see this sort of capital injection continue. And given the revenue scale that听Chehaoduo can likely find given its total addressable market (TAM, in venture parlance) and per-deal value (cars are expensive), perhaps this is one of SoftBank’s more reasonable disbursements.

Top Image Credit: .

According to the funding round data captured by SA国际传媒, the Vision Fund led raised by Sao Paulo-based , a provider of on-demand same-day logistics services in Brazil. and , a local Brazilian newspaper, picked up the round as well.

On Wednesday, SA国际传媒 News confirmed that the Vision Fund invested in Loggi鈥檚 round and contributed $100 million to the deal. The source made no comment about the total amount raised in the offering.

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Local investor also participated in the round. SA国际传媒 data indicates that the funding actually closed in March, but was just announced today, on October 16th.

Temporally, this roughly aligns with mid-March which suggested that SoftBank was planning to invest between $100 million and $150 million in Loggi. That report cited an unnamed source who said the deal wasn鈥檛 finalized and could fall through at the time of reporting.

SBVF has invested in a number of other global companies with direct or indirect ties to the same-day logistics space this year, including China-based (in which SBVF led in April), (SBVF invested in its $535 million Series D in March). It also has put 听money in Uber and Grab, both of which have food delivery components to their businesses.

The new capital puts Loggi鈥檚 total raise to date at $144 million. The $111 million raise is what we call a supergiant round鈥攁 growing, and busy segment of the venture capital universe. The SBVF has been a leading light in the growth of such super late stage rounds. There鈥檚 no doubt that the impacts of its fund size, valuation aggression, and investment cadence has changed the venture market.

However, while $100 million and larger rounds are becoming globally common, their distribution is not uniform. The United States and China command the lion鈥檚 share of the capital varietal, for example. Latin America, in contrast, sports a relative dearth of supergiant checks.

That makes the Loggi round all the more notable. A $100 million check in Brazil is news.

The round is likely welcome news for current Loggi shareholders, including capital giants like , and corporate players like Qualcomm and Microsoft that have previously contributed capital to the startup. Local players and led the firm鈥檚 seed round. SoftBank, therefore, may be helping the local venture scene as it looks for its own returns鈥攅veryone loves a markup.

滨濒濒耻蝉迟谤补迟颈辞苍:听

News broke this morning that , an Indian company that provides budget hotels, has . Normally a transaction of this sort wouldn’t hit our radar鈥攈ospitality is a bit afar from the world of high-growth startups and their attendant sectors and investors.

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Not this time.

OYO has raised new funds to the tune of $1 billion, a staggering amount of capital for any company, let alone a firm that isn’t well known and operates in a sector that doesn’t normally attract growth capital of this sort. But in this case, it’s a very us story: OYO is a SoftBank-fueled affair.

You likely already guessed that its latest round included participation from SoftBank’s Vision Fund, a capital vehicle with an itchy trigger finger and a seemingly bored and restless investing disposition. But the SoftBank-OYO relationship is older than just this one round.

Indeed, per SA国际传媒, SoftBank led OYO’s ($100 million), its ($90 million), and its ($250 million) before today. That’s an incredible string of checks for any company to raise, let alone for one company to lead.

So what does OYO do? TechCrunch’s :

“OYO was started in May 2013 by Thiel Fellow听Ritesh Agarwal, who was then aged 19. The company aggregates budget hotels and hostels in India, ensuring that they include minimum standards such as clean sheets, hot showers and free WiFi. It has since branched out into other kinds of lodgings, and verticals that听.

Today, OYO claims to have over听10,000 franchised or leased hotels in its network, which it says spans 350 cities across five countries.听听and it is also present Nepal and Malaysia. More recently, it听recently entered the UK market this month.”

Russell goes on to note that the firm’s Chinese ambitions aren’t small, with OYO claiming nearly 90,000 rooms in the country.

While the model must have some organic legs鈥擨 can’t attest to the India hotel market per se, making it hard to comment as to why or why not OYO was founded there and what market gap it serves鈥攊t’s worth noting that many countries already have what OYO promises: clean and decently-equipped hotels. I wonder if that will cap its rapid growth in time.

But even more, it’s a bit hard to see why the Vision Fund is interested in the company. After all, we’ve been told that the Vision Fund, a taking aim at growth companies around the world, wants to work on perhaps . Or just big deals with fast-growing companies, as 听seem to indicate. Whatever. Now it’s hotels, too.

So the Vision Fund, along with and and , are in the hospitality business. Either this is brilliant and I’m boring and old, or 2018 is proving to be a bit odder than I could have guessed. That or there just aren’t that many places in the world you can stuff a billion dollars in a single go (aside from the ever-unprofitable Uber, WeWork, Didi, Grab, Lyft, and Go-Jek), so you wind up funding a five-year-old hotel upstart as you have to put the money somewhere.

For the company, it’s a great day. For the investing classes, I’m mostly just confused. So much for margin hunting.