What's going on?

Japan-based SoftBank, one of the world�s biggest tech companies, is set to launch a huge investment fund that will be partly funded by Saudi Arabia. The new fund, which will invest primarily in private tech companies (a.k.a. �startups�), aims to manage up to $100 billion! (tweet this)

What does this mean?

SoftBank aims to invest at least $25 billion in the new, London-based fund. The idea is for it to invest in different tech companies over the next five years with the potential to invest up to $100 billion in total (with much of that coming from Saudi Arabia). To put that amount in context, it would be the same size of all funds raised by US venture capital firms over the last two and a half years combined.

Saudi Arabia, presumably, views SoftBank as a good steward for its investments. SoftBank, for its part, will be able to make larger investments (and perhaps therefore get better access to interesting opportunities) as a result of the partnership.

Why should I care?

For the market: Money is still flooding into �private� companies.
Private tech companies have raised record amounts of investment in recent years, primarily from �venture capital� backed funds that are similar in nature to the one that SoftBank is preparing to launch. Many investors are skeptical that the lofty valuations given in private markets (e.g. Uber�s $66 billion valuation) will be supported by public market investors. SoftBank�s news is evidence that more money is set to be allocated to private investments, which could raise the bar even higher for private companies that ultimately want to become publicly traded.


The bigger picture: This is part of Saudi Arabia�s plan to diversify its wealth.
Right now, much of Saudi Arabia�s wealth is tied to oil. But under the leadership of its new Crown Prince, the country is actively looking to diversify its investments away from oil � and tech seems to be a big focus (for example, it recently invested $3.5 billion in Uber)