In A Flash, Softbank VC Morphs Into Mobius

Much like an emancipated teenager, Softbank Venture Capital last week firmly declared its independence from its parent company by changing its identity. The firm, which has unofficially been operating independently of Japan-based Softbank Corp. since 1996, has renamed itself Mobius Venture Capital.

The name change does not affect the firm’s management, the size of the funds under management, its existing portfolio or the scope of its U.S.-based operations or staff.

The only thing that might eventually be impacted is the size of Softbank Japan’s limited partner position. Once the firm’s largest LP, Softbank may ultimately decide to sell off some of its Mobius stakes in the secondaries market, said Gary Rieschel, executive managing director with the firm.

“The private equity business has gone from a major focus at Softbank to a secondary or tertiary activity,” he added. “With the change of direction at Softbank [to next-generation infrastructure technologies], I wouldn’t be surprised if they came to us and wanted to sell off their position.”

Rieschel added that he didn’t know when such a sell-off would take place, or just how much of its LP position Softbank might consider putting up for sale.

On the upside, should Softbank choose to reduce its stake in Mobius, the door will be wide open for new investors to come in and carve out their own interests in future funds, creating a more diverse limited partner pool.

Although Mobius must essentially rebrand itself now that it has emerged from beneath the Softbank umbrella, Reischel said the move is positive because it will eliminate much of the confusion that has plagued both Softbank and its venture arm since Softbank VC was founded five years ago.

“There’s been a lot of confusion about what Softbank does and what we do in the fund,” Rieschel explained. “We look like Kleiner Perkins and Sequoia Capital, but other VCs have been confused. People have asked, does the money come from Softbank and, therefore, are the [investment] decisions influenced by Softbank? As long as Softbank’s focus was private equity, the confusion was, frankly, manageable. Now that Softbank’s strategic direction has moved away, we felt it was important to make sure the market understands our unique and independent position.”

It may be, too, that once Softbank began to pay less attention to its venture capital arm and dote more on its new love – the creation of next-generation infrastructure platforms in Japan – Mobius may have begun to feel like the neglected, red-headed step child and so decided to strike out on its own.

What the consequences of that decision are, if any, remains to be seen. Rieschel insisted that future Mobius funds will not shrink in size, even if Softbank chooses to reduce its stake down the line. Further, although having a diverse LP roster would be positive for the firm, it will be interesting to see how strong its investor recruiting prowess will be without the Softbank name behind it.

So far, though, the firm’s LPs have reacted favorably to the new moniker. In fact, Rieschel said he did not hear any negative feedback from investors during or after their annual meeting, which was held last week.

The firm’s namesake was a German mathematician, astronomer and physicist, who, in Rieschel’s words, exemplifies its multi-disciplinary, innovative approach to investing.

Moreover, it was the only name everyone in the group could agree upon, he added.

Wild For Wireless

Along with its new name, Mobius intends to focus more on wireless investments. And it’s not wasting any time.

In fact, the firm announced last week that it pumped a combined $36.4 million into a pair of wireless plays.

First is SkyPilot Network Inc., which touts itself as a next-generation broadband access provider that builds and operates wireless networks in suburban markets based on 802.11 protocol.

Mobius led the Series B transaction with an $8 million contribution, investing alongside AOL Time Warner Ventures, Softbank Asia Infrastructure Fund LP, Invesco Private Capital and others.

SkyPilot intends to use the proceeds to launch its product in its first market, Silicon Valley, in Q2 of next year.

Additionally, Mobius co-led a Series A financing for wireless semiconductor solutions provider Bergana Communications along with Blueprint Ventures and Advanced Technology Ventures.

Both companies will likely be shopping new offerings to VCs in 2002.

Robyn Kurdek can be contacted at:Robyn.Kurdek@tfn.com