SoftBank is cutting some big checks to tech companies, and it’s messing with IPOs

The trend of huge investment funds shifting their focus towards private companies is causing a major slump in the number of new US public companies.


October 23, 2017

On Friday, SoftBank’s CEO Masayoshi Son spoke of his plans to invest roughly $880B in tech companies through at least three more iterations of its Vision Fund, quelling hopes that the tech IPO market would bounce back this year.

The trend (led by Softbank) of investment funds shifting their focus towards private, rather than publicly traded, companies, is causing a major slump in the number of new US public companies (down 50% over the last 2 decades).

And it’s only getting worse

Private companies are being doused in riches from big pocket investors like SoftBank, while recently public companies (like Blue Apron) brace for a market tumble — raising concerns about IPO opportunities in 2018.

Just 12 venture capital-backed tech companies went public in the US in the first three quarters this year, compared to 27 during the same period in 2014.

SoftBank’s just getting started

On top of making headlines due to its monster deal with Uber, expected to finalize sometime this week, SoftBank has announced plans to invest in at least 1k tech companies over the next 10 years.

In other words, expect the trend of merger and acquisition exits to continue and fewer IPOs long term.

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