Masayoshi Son quietly turns over a single small profit of $2.4 billion

Investing in healthcare makes more money than investing in Uber.

It is well known that Masayoshi Son blew up the sharing economy bubble, and later he tasted the bitter taste of Wework folding and missing Airbnb.

Surprisingly, however, he has made considerable gains in the healthcare industry, which has high R&D investment and long return cycle. It is with the passage of time, the value of his layout in this track is surfacing.

The first phase of Vision Fund has invested in 86 projects, and those related to medical and health care account for 10 of them. From its inception in 2016 until the end of December last year, Vision Fund Phase I had five healthcare projects go public, earning a total return of $4.422 billion.

This equates to nearly one-fifth of the returns contributed to Vision Fund I. As of the end of last year, the total return of the Vision Fund I was $20.4 billion.

Not only that, but Masayoshi Son’s return on his healthcare investments was even larger than Uber’s contribution to the Vision Fund I. By the end of last year, the second-highest return for Vision Fund I was Uber, with a $3.7 billion haul, while the health care projects added up to $700 million more than that.

And compared to investing in the top companies in popular industries like Uber, healthcare investments are much more capital efficient, and he has earned higher returns for lower investment costs by investing in healthcare. He invested $1.238 billion in the five medical companies mentioned above, while he spent a full $7.666 billion on Uber.

Therefore, the achievement of Masayoshi Son’s investment in healthcare should not be ignored. He seized the opportunity in advance and gained high returns. The most convincing is the case, Guardant Health for the Vision Fund return figure is $2.4 billion.

After tasting the sweetness, Masayoshi Son has increased the layout in the medical field. The second phase of Vision Fund has now invested in more than a dozen healthcare projects.

Investing $300 million in Guardant Health, earning $2.4 billion in 2 years
Guardant Health, a cancer early screening company, brought returns to Vision Fund I that are particularly noteworthy. $2.4 billion, or about 14.9 billion yuan, is more than what the other four medical projects brought together, an amount of return on investment that is also rare in the medical industry.

“This is likely to be ranked TOP 1 of the year in China”, a medical investor commented, “Most domestic listed companies in medicine or medical devices have a market capitalization of between RMB 3-30 billion, with a few having a market capitalization of hundreds of billions. Assuming that the largest investment institution shareholders hold 15% of the shares, most of the returns are between 500-5 billion. There may be other healthcare projects with higher returns if you put it globally, but this would certainly rank among the top.”

The superstar case of domestic healthcare investment last year was Qiming’s investment in Gan & Lee Pharmaceuticals, while Sun’s return on GuardantHealth was similar to the former. Last year Gan & Lee Pharmaceuticals went public, with a market value of more than $100 billion at one point, and Qiming Ventures was the largest shareholder behind it, holding about 20 percent of the shares, with a return of about $14.7 billion based on the latest market value of $73.5 billion.

But in this case written into the history of domestic venture capital, Qiming waited for 10 years, while people will naturally pursue more short-term and faster to see examples of big money. For example, DCM Lin Xinhe has mentioned that investing in 58, SAIF, DCM, and Warburg Pincus all gained a billion dollar return, but he said it taught him a lesson that he thinks the smartest one is PE firm Warburg Pincus, which waited the shortest time to harvest.

Again, with a return of nearly 15 billion RMB, Sun waited just 2 short years on the GuardantHealth project.

Looking at the investment process, this is another example that contrasts with the classic early stage investment.

Qiming invested in Gan & Lee Pharmaceuticals early, starting with its Series A investment in 2009. It is undeniable that this is extremely meritorious. The medical industry has a high investment threshold, and it is difficult to make decisions without sufficient expertise.

The timing of Softbank’s investment in Guardant Health is even more backward. Guardant Health was founded in 2011 and opened a $360 million Series E round in 2018, at which point Masayoshi Son led a $308 million investment in one breath. In the same year, Guardant Health completed its IPO, with SoftBank holding 33.4% of the shares before the IPO.

It can be said that both the single investment amount and the shareholding ratio are very high. According to Artery Network statistics, in the global healthcare investment and financing events in 2018, the average amount of Series E financing for healthcare companies was about $100 million. This also means that at that time, most of the E rounds that invested in medical projects had a single investment of less than 100 million dollars.

Let’s just say that Masayoshi Son’s crazy play is also very different from most investors’ strategies as well.

From the Guardant Health E round of investors, the investment share of competition is also very fierce. There are Silicon Valley Sequoia Capital, Singaporean consortium Temasek. Even Sequoia is a long-time shareholder, and participated in the B round of financing in 2014, but Masayoshi Son used the “weapons of capital” in the eyes of his peers to gain enough say.

In this track of medical care, which has a “higher floor” compared to TMT, the scale of the fight can in turn make Sun feel more at ease.

The company is also backed by a number of Chinese venture capitalists, such as Lightspeed Venture Partners, Aubrey Capital and CSC.

Guardant Health was initially favored because it was expected to change the way cancer screening was done, with the ability to perform biopsies through blood tests, which is much more convenient than surgical screening for cancer.

More importantly, it is backed by a large market size. Yahoo Finance has reported that one of the company’s biopsy products, Guardant360, has a potential market size of $6 billion, the other biopsy products, Lunar-1, will have a potential market value of $15 billion per year, and Lunar-2 may have a market opportunity of more than $30 billion per year.

When it goes public in 2018, GuardantHealth’s market capitalization will be around $8 billion and currently stands at about $12.7 billion.

After tasting the sweetness, “Conservative Land” is making a big push
The results of the first phase of the Vision Fund’s investment in healthcare are also closely related to the general environment.

The S&P 500 health care sector index has risen nearly 23 percentage points in the past year due to the epidemic. According to a report by CIMB, equity ETFs received the largest net inflows last year, with the pharmaceutical and biotechnology sector at the top.

The five healthcare companies mentioned above also essentially doubled their share prices last year.

The medical investment boom is also on the rise under the influence of the secondary market sentiment.

For example, last year, there was a trend of mergers and acquisitions in the liquid biopsy field. Illumina, a biotech company with a current market cap of nearly $60 billion, acquired Grail, a cancer-focused early screening test, for $8 billion last year, and Exact Sciences, a tumor screening company, acquired Thrive, a one-year-old liquid biopsy startup, for $2.15 billion.

But Sun seized the opportunity early and reaped high returns. Soon, biopharmaceutical and medical technology company Roivant Sciences will also go public by way of SPAC.

And after the sweet taste of investing in healthcare, Masayoshi Son has also increased his efforts in this field. Currently, Vision Fund II has invested in more than a dozen medical projects.

For example, in February last year, blood test company Karius Series B financing of $165 million, Vision Fund II led the investment. In December last year, Pear Therapeutics, a digital medical technology company, raised $80 million in Series D funding, led by Vision Fund II. In April, EDDA, a smart medical imaging and diagnostic company, raised $150 million, led by Vision Fund II.

But it is also clear that Masayoshi Son’s approach to medical investment has become a little more conservative. Although he still wants to lead investments in good projects, but the amount of a single investment is declining, and we still have not seen a $300 million investment – follow the trend, rather than running ahead of it – Mr. Sun is still strong, but not ready to use this track The scale of the exercise of “pricing power”.

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