SoftBank, Saudi Arabia team up to create $100B tech fund

Fresh from leading a $130 million investment in Zymergen, SoftBank has signaled its intent to keep making big bets for years to come. The Japanese telecommunications giant is teaming up with Saudi Arabia’s sovereign wealth fund to invest up to $100 billion in tech companies over the next five years.

Most of the money looks likely to go to traditional tech companies, but the investment track record of SoftBank suggests startups with a foothold in biotech can compete for a slice of the monster fund. In 2016, SoftBank has led the aforementioned $130 million Series B round in Zymergen and played a role in long-read sequencing go-getter 10X Genomics’ $55 million Series C. SoftBank has also dipped its toe into biotech by backing Panacea Pharmaceuticals, and is active in digital health.

To get up to its $100 billion target, SoftBank is enlisting the support of other investors. SoftBank itself plans to invest at least $25 billion. The Public Investment Fund (PIF) of the Kingdom of Saudi Arabia is expected to commit $45 billion. SoftBank and PIF are talking to “a few large global investors” with the means to put forward the approximately $30 billion they need to hit the $100 billion target for the fund.

PIF has minimal experience of tech investing--and none of biotech IT--but it does have a lot of cash and a desire to diversify beyond oil. The fund signaled its intent to get deeper into tech in June when it invested $3.5 billion in ride-hailing service Uber. For Saudi Arabia, the deal with the Silicon Valley darling represented an early move in its push to increase the proportion of its money that is invested overseas from 5% today to 50% by 2020.

The financial might of Saudi Arabia, SoftBank and their as-yet-unnamed potential partners means the fund will significantly increase the amount of money swilling round the sector. If the partners hit the $100 billion target, the vehicle will equal the size of all the funds raised by U.S. VC shops in the past 30 months, the Financial Times reports. And, if SoftBank continues to invest as it has in 2016, when more than 10% of its bets have been biotech-related, that will mean more money for life science IT.