SoftBank Vision Fund 2 builds momentum
June 15, 2021
IRL, a Gen-Z-focused messaging app maker with just 25 employees, became a unicorn on Tuesday.
It’s an enormous valuation for a company with so few workers. But IRL’s attainment of unicorn status had been anticipated for a while. New social media companies have been red hot recently, and The Information in April reported that IRL in particular was in the process of raising at a $1 billion-plus valuation. Sure enough, the San Francisco-based social media company said Tuesday it raised $170 million in Series C funding that values it at nearly $1.2 billion.
Noting attrition among Facebook’s younger users, IRL CEO Abraham Shafi and co-founder Scott Banister saw an opportunity to create a calendar- and chat-focused app for that audience, with offerings similar to Facebook’s own events and group features. As with many of the newer social media companies to crop up, including Clubhouse, the company has yet to post any revenue, but it hopes to eventually do so by taking a cut of fees charged by users offering services on the platform (a yoga class or membership dues, for instance).
Interest in U.S. social media companies has recently reignited after a dry spell when many investors believed the incumbents had locked out new players. But few of the newcomers have managed to reach unicorn status—yet. Per data from Pitchbook, aside from Clubhouse and Nextdoor, no other U.S.-based social media company has raised at a $1 billion-plus valuation since Snapchat in 2014. Now IRL is joining the crew, with an estimated 12 million monthly active users and growth of 400% since the start of the coronavirus, according to the company.
What came as an even greater surprise was the investor leading the round. The Information had reported that none other than Tiger Global—the most active unicorn investor of 2020—and IVP had been in talks to invest. On Tuesday though, the company revealed that it was the SoftBank Vision Fund 2, with participation from investors such as Dragoneer, Goodwater Capital, Founders Fund, and Floodgate, that would lead the round. Tiger was not named an investor in the press release announcing IRL’s new round of funding.
Having boosted the size of its second Vision Fund from $10 billion to a whopping $30 billion in May, SoftBank has made its weight and reach well known in recent months. Entirely absent from rankings of the 10 most active investors leading rounds in unicorn companies worldwide in 2020, it is now tied for sixth (alongside T. Rowe Price, Altimeter, and D1 Capital Partners) in 2021 as of late Monday, per data from Pitchbook. And that calculation likely doesn’t even include SoftBank’s $360 million round in Carro, a Singapore-based marketplace for used cars, announced early Tuesday.
Other investments by SoftBank’s Vision Fund this year have included Swedish fintech Klarna and Singapore-based retail analytics company Trax.
In conversation with Term Sheet, IRL CEO Shafi acknowledged that other investors had preemptively looked to back the company. “I chose SoftBank because they have a really great reputation for believing in a company post- and pre-IPO, and for investing in social networks,” he said, pointing to TikTok operator Bytedance.
Shafi’s remarks made me wonder if the absurdity of SoftBank’s strategy in 2019, which was viewed as bordering on delusional (it poured $1.7 billion into a single round for WeWork), had turned into something of an advantage from a marketing perspective in 2021. Perhaps the gloss of its recent success from high-profile exits in companies like Coupang, combined with its willingness to pour billions into companies that were considered unviable (and many were) two years ago, can be framed as a story of “unwavering conviction” today—despite the painful failures of parts of its portfolio.
STRIPE: Everyone wants a piece of the payments giant. Per the Wall Street Journal, investors including Shopify and Sequoia have acquired about $1 billion in shares of the company in secondary sales.
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