Softbank UK Ventures, the 50:50 joint venture between Softbank and News Corporation, expects to close fund raising on its $450 million fund by the end of the first quarter. The fund’s first closing – with about 85% of the monies raised – was held towards the end of last year. Softbank committed $250 million to the venture and News Corporation, via ePartners II fund, has committed $150 million. Interestingly, this $150 million from ePartners II fund looks like recycled monies since Softbank committed $200 million to ePartners fund II.
The fund is likely to be invested over a two and a half to three year period with lead investments attracting a minimum funding of £2 million and maximum of around £8 million. However, since this constitutes the initial investment the total investment in a company could reach two times that figure. The fund is not designed as a seed fund but may make investments at this stage.
David Sola, who runs the Softbank UK Ventures team, which invests exclusively in technology companies in the UK and Ireland, has announced two deals and expects to close another four in the coming month putting the team close to its target of one deal per month. Sola says that effectively the team, which currently consists of seven but will increase to its budgeted size of ten soon, was in place August 1, 2000. Initially it was envisaged that Mark Booth, chief executive of ePartners would manage Softbank UK Ventures, which he did until Sola came on board. Effectively, this meant that Booth was recruiting Sola at the same time as other members of Sola’s team. ePartners and Softbank UK Ventures share an office in Chelsea.
The two deals thus far are Ripcord in which Softbank UK Ventures has invested $14 million of a $16.5 million investment round. Ripcord is a wireless company with the technology to enable workers such as field sales team to log into real time databases and so forth controlled by head quarters.
The second company is Riot Entertainment in which Softbank UK Ventures has invested a total of $4 million across two rounds, the first led by Nokia and the second by Carlyle Internet Partners. Riot Entertainment technology has enabled multi-player games for mobile phones using SMS messaging. Riot and the mobile phone operator share the SMS revenues on games played, and marketing is provided and paid for by the mobile phone companies.
At the same time that the Softbank and New Corporation Softbank UK Ventures joint venture was set up, Softbank and News Corporation also teamed up in a joint venture called eVentures. This was, with hindsight, an ambitious project aimed at propagating successful US Internet companies into the UK and other English speaking markets. ePartners II fund committed $250 million to eVentures and eVentures won Diana Noble to lead its investment team. Noble spent 12 years at Schroder Ventures where she made partner at just 27 years of age.
eVentures, set up in the spring of 2000 when the Internet bubble burst, found that US Internet concepts did not translate successfully into the UK market. Consequently, Noble decamped to Reed Elsevier, the international publisher and information provider, at the end of last year to set up a corporate venturing unit with a £70 million fund. eVentures has closed shop. The office space in Chelsea once dedicated to eVentures is now partially used by Softbank UK Ventures investee companies.