SoftBank made headlines Friday when it announced it's teaming up with Saudi Arabia's public investment fund to invest a total of $100 billion in technology companies over the next five years. While this initiative means dollar signs for companies around the world, we're looking local. What’s Japan-based SoftBank got to do with Boston, anyway?
Turns out it has several strong, historical ties to our city. A number of people within the VC scene have had affiliations with SoftBank. For instance, Union Square's Fred Wilson raised part of Flatiron Partner's fund from the company. Foundry Group's Brad Feld, board member of Yesware and Harmonics, is the former managing director of SoftBank Technology Ventures, where Avalon's Rich Levandov had been an affiliate partner. Charles Lax, managing general partner at Needham-based GrandBanks, is a founding General Partner of SoftBank Venture Capital and SoftBank Capital Partners. While Atlas’ Jeff Fagnan and Spark’s Alex Finkelstein worked with Jordan Levy, general partner of SoftBank Capital NY, at Seed Capital.They’re bringing to the table something that a lot of VCs aren’t: operational experience.[/pullquote]
And you’ve probably seen SoftBank’s name in funding announcements throughout the Hub. It's invested in the following Massachusetts companies:
Cybereason - Boston
Swirl Networks - Boston
Celtra - Boston
Aldebaran Robotics - Based in France with a Boston headquarters
Luvo (formerly Flashnotes, shuttered in 2016) - Boston
Altaeros Energies - Somerville
Interactions, Inc. - Franklin
Bluefin Labs - Cambridge
Desktone (acquired by VMware) - Chelmsford
According to Cybereason, SoftBank has a way of being heavily involved with their investments - and it has reaped the benefits. SoftBank led Cybereason’s $59 million Series C round in October of 2015, which also included investments from Charles River Ventures and Spark Capital.
“The way works is it’s looking for companies that have something super unique in their field that it believes it can make them a leader in their market,” Lior Div, co-founder and CEO of Cybereason, told us.
To Div’s point, SoftBank’s investment in Cybereason came about in an unconventional way. It was a customer.
“SoftBank first tried it internally as a customer…After they used it, their security team saw we could provide a value exactly like we said we could,” Div said. “They were impressed by that because usually there’s a gap between what you say your technology does and what it can actually provide.”
After investing in Cybereason, SoftBank stepped up even more, becoming a reseller of its cybersecurity solution. Cybereason and SoftBank have been running as a joint venture in Japan. Div said this has allowed his company to penetrate a market that's tough to crack when you're in the cybersecurity space.
“It was a game-changer for us… They’re a reseller, a customer and an investor in the company. It’s a true partnership,” he said. “They’re bringing to the table something that a lot of VCs aren’t: operational experience. They’ve built not just one business, but many businesses… They have knowledge on how to start, how to grow a company. Other VCs and hedge funds don’t have this knowledge.”
According to Div, the partnership with SoftBank has significantly contributed to Cybereason’s recent growth. “Once we got the investment from there, we took off,” he said. “We’ve grown more than three fold in the past year. We’re going to be 220 people by the end of the year. Last year. we were 50 people. That’s massive growth we’re talking about. It’s also affected how many customers we have, revenue that we manage to generate.”