BOSTON – Coinciding with the close of its early-stage fund, Softbank Technology Ventures V, Softbank Corp. in June closed the $1.2 billion Softbank Capital Partners, a vehicle focused on more mature opportunities.
Softbank Capital, first marketed in January, will be used to invest in – but not acquire – later-stage, pre-IPO technology companies. The fund is similar to the MeriTech Capital mezzanine fund launched in March by Accel Partners, Brentwood Venture Capital, Oak Investment Partners and Worldview Technology Partners (VCJ, April, page 5) because of its investment focus, said Softbank Capital General Partner Charles Lax.
“When you end up running the company, you fail,” he explained. “This isn’t an LBO fund.”
With Softbank Capital, the Japan-based Softbank will make available to outside investors its large-scale, late-stage corporate investment program, which has backed technology companies such as Yahoo! Inc. and GeoCities Inc.
Softbank has welcomed limited partners in its United States-based early-stage venture fund, Softbank Technology Ventures, which closed its fifth vehicle parallel to Softbank Capital. Until now, however, investors did not have the opportunity to invest alongside the corporation in its largest, late-stage deals.
Corporations, pensions and investment banks were “delighted” at the prospect of investing in a late-stage fund with Softbank as limited partners, Mr. Lax said, declining to name investors in the new vehicle. “There was a lot more interest than we could accommodate.”
Softbank Capital will take positions of as much as $180 million in mezzanine, pre-IPO and private investments in public enterprise (PIPE) deals. The company invested $40 million in a mezzanine round for 1-800-Flowers.com Inc., which filed to go public in late May, and $80 million in a PIPE deal for Global Sports Interactive.
Mr. Lax and Softbank Corp. Vice Chairman Ronald Fisher will oversee Softbank Capital, and eventually hire two managers. Mr. Lax, a general partner of Softbank Technology Ventures IV, will be a special limited partner in Fund V.
Softbank Technology Ventures V, which had a $400 million target, was greatly oversubscribed, closing on about $600 million, Mr. Lax said.
Gary Rieschel, executive managing director of Softbank V, could not be reached for comment.