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Comment by aresant | Hacker News Reader

I had a really interesting meeting with a huge institutional investor last week ($50b+ balance sheet) that has a ~$2b allocation to VC.

They said that softbank has almost had a "chilling effect" on their VC group - especially around investments that are truly capital intensive.

Their strategy has shifted away from Series A and towards Series B / C where they can either co-invest with SoftBank, or if wait and see where Softbank invests before they pick a horse in a category they like so they at least have that info in as part of their investment calculus.

EDITED last paragraph for clarity

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That's a great risk-management strategy. Let's put all eggs in one basket and not do any homework. Lol!

Well, consider that softbank-sponsored startup will outspend all the competitors on client acquisition, and can bleed the competitors dry by providing services below cost. Do you _really_ want to invest in startup which is competing against some entity sponsored by softbank?

I mean, softbank investment is competitive advantage in itself, just because of it's sheer amount.

If it works. You also have huge companies (AAPL, GOOG, AMZN) who are in this market and invest billions as well, but have massive amounts of revenue. Raising $1b for a what, $3b valuation, puts you out of reach of m/a for probably everyone and requires you to get in $300M revenue yearly at some point with huge amounts of growth potential.

> Do you _really_ want to invest in startup which is competing against some entity sponsored by softbank?

Yes. If they have a good idea, large market, great product, good marketing and outstanding team.

Isn't it more like piggybacking off of the homework of others, who specifically don't put all of their eggs in one basket?

Just like ETFs, unless you're 1% brilliant or have insider information you're unlikely to beat the market over an extended period of time.

If I could only make a few big or medium size investments I'd probably follow the market leaders as well.

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