10 Lessons From SoftBank Ben Weiss From Seven Years In Technology Investing

He says SoftBank CEO Masayoshi Son thinks and acts like any other venture capitalist in the world.

The CEO of Softbank is known to lay out plans for 30 and 300 years, which mirror Softbank’s approach to investing.

Vision Capital

“The CEO of Softbank has coined a new term ‘Vision Capital’ to replace Venture Capital,” Weiss says.

“His vision is to become the Rothschilds of the twenty-first century for the information revolution as Mayer Amschel Rothschild and his family did for the industrial revolution.”

He says SoftBank has faced a lot of scorn for its investments, including accusations that the investments were overpriced or came at bad timing.

“But they are often part of a future master plan, which becomes known to the public over time,” he says.

“Softbank’s tentacles are pervasive to nearly every industry on every major continent, and the ability to add value to their portfolio companies through its network of affiliates and investors is unparalleled.

“If the adage that “knowledge and information is power” is true, SoftBank is the most powerful technology investor in the world.”

Weiss polished his tech investment credentials last week with his 15th successful exit from an Israeli startup.

This was Intel’s acquisition of workload optimization startup Granulate for $650 million ($875 million) — a staggering price compared to the previous valuation of $110 million.

Another successful exit for Weiss was the initial public offering of business intelligence software company LikeWeb, which listed on the New York Stock Exchange last year.

The company, whose stock is down 40 percent since listing and valued at $965 million, has opened an office in Australia.

Weiss says many of the Israeli government’s policies could be replicated here to encourage greater investment in technology.

safety net

He says the latest program to encourage institutional investment in start-ups is the one launched by the Israel Innovation Authority to make up for losses over a seven-year period.

The authority has allocated NIS 2 billion ($833 million) as a safety net for organizations that support the startup and bear a negative return.

They will be compensated for up to 40 percent of their losses.

The program prompted a fivefold increase in institutional investment in startups in 2021 to $900 million.

“If they put that into practice in Australia, you would basically get risk-free investments by the big institutions, but God knows how that will pass through government these days,” Weiss says.

He says the Israeli government encourages angel investors by allowing them to write off the value of the investment in the investment year.

This is similar to the Australian Early Stage Venture Capital Limited Partnerships program, which offers income and capital gains tax credits from eligible early stage venture capital investments and income and gains from the disposal of qualified venture capital investments.

Weiss says most of Israel’s successes lie in deep technology, business software businesses, and the Internet, which requires more significant investment in product development and more time to market.

The Government of Israel provides multi-year funding of up to 50 percent of R&budgets d.

Israel also has funding programs to encourage workforce participation and high-tech innovation in minority groups, including Arab and Orthodox Jewish communities, to make up for the current shortage of skilled labour.

The program operates, based on news reports that the number of ultra-Orthodox Jews working in the country’s tech sector jumped 52 percent from 2014 to 2018, with women driving.

10 lessons from seven years in technology investing

Weiss shares with Chanticleer his ten lessons from seven years in technology investing.

The first relates to the need to build trust with entrepreneurs and fellow investors.

“Successful entrepreneurs and tier 1 startup venture capital funds are very selective in their selection of participating investors, so it is important to be known, liked and respected,” he says.

Second, the need to accept and tolerate past failures.

“Many successful Israeli companies are founded by entrepreneurs who have failed many times before they achieve success, so be open when meeting people and be careful not to judge past activities harshly,” he says.

Third, he says the startup needs to think globally from day one.

“Success in the domestic market does not automatically lead to success in the global market, so the product or solution must be designed for key markets from day one.”

Fourth, company culture is critical.

“There is a shortage of skilled labor and the company’s ability to attract and retain talent is the key to future success,” he says.

“Outsourcing skilled labor to countries like Ukraine and Russia have been useful alternatives in the past but cannot be relied on moving forward.”

Fifth: Implementation is more important than the idea or vision.

“A company’s ability to attract and retain good entrepreneurs is just as important as its ability to attract and retain talented engineers.”

Sixth, there is safety in numbers.

“You want to have good, deep-pocketed co-investors to help out on both the good and the bad days with capital and other value added and introductions,” he says.

Seventh, prepare for the long distances.

“Companies are now staying private for longer periods and secondary sales are becoming more and more popular as a way for venture capital funds to exit their positions.”

It was this lesson that prompted Weiss to launch a secondary fund in Israel that would buy shares in private companies from existing investors, usually at a discount on valuation.

“We pick and choose investments, have made investments of $65 million in the last 18 months, and are launching a new $100 million fund, and all the support is coming from Europe and the UK,” he says.

His eighth lesson from his technical expertise is to be wary of inflated valuations.

“There is often a significant disconnect between the valuation multiples of private companies versus their public comparisons,” he says.

“If the company’s exit plan is through an IPO, be careful not to overpay on the private rounds.

The ninth lesson is to maintain good relations with the founders and management throughout the journey.

“They often influence and determine the value of exit terms and early on, minority investors are often left out.”

Finally, he stressed the importance of having an exit strategy.

“Find out how to get out of an investment before you get into it,” he says.

“It’s hard to get into the IPO window and it swings at times, and make sure you have a lot of potential private acquirers to reach out to when you’re ready.”

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