Have you ever played Jenga? We bet you have. While you were stacking the small wooden blocks, did you see the future of energy storage hidden in the game? No?
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Switzerland-based Energy Vault seems to have, and the company’s innovative potential energy storage method made SoftBank’s Vision Fund see enough potential profit to drop $110 million into it. (The company has raised other capital per Crunchbase, including a venture round led by Cemex Ventures, subsidiary of the cement giant. That deal will make sense shortly.)
For the Vision Fund, the deal size isn’t shocking; but what caught our eye is the technology selected. This is the fund’s first-ever investment into an energy company, according to a release by Energy Vault.
Energy Vault is a change from Masayoshi Son and Company putting capital to work in on-demand companies, chips, or dog-walking, and we’re here for it.
Here’s how the company’s Super Jenga (our name, not theirs) system works:
That is very smart? And simple? And pretty cool? And we suspect that it would look pretty neat in action. (TechCrunch has another video of the system.)
Energy storage is an active sector, one that has attracted capital for years as our needs to capture, and later access, power have risen; as the world moves towards renewable energy sources, some of which are more cyclical in nature than traditional power generation methods, being able to save generated power is a key piece of work.
To demonstrate the scale of the need for Energy Vault’s product, or one like it, read this piece from the Los Angeles Times discussing how Utah may store air power in salt:
One hundred miles south of Salt Lake City, a giant mound of salt reaches thousands of feet down into the Earth. It’s thick, relatively pure and buried deep, making it one of the best resources of its kind in the American West.
Two companies want to tap the salt dome for compressed air energy storage, an old but rarely used technology that can store large amounts of power.
Compared to that, Energy Vault’s methods look downright simple. Let’s move on now to the Vision Fund and its recent deal flow and performance (both the good and bad), leaving you with the point that Energy Vault is incorrectly named. It should be called “Energy Tower.”
Vision Fund 2
Aside from investing in every late-stage company you can name, SoftBank is looking to raise more money of its own. The SoftBank Vision Fund II plans to land somewhere around $108 billion, several billion dollars larger than its older sibling.
The pace and size of investments from SoftBank’s first fund was hard to wrap our heads around — and, apparently, investors struggled as well. Reports in June detailed that the second Vision Fund was having a hard time raising cash to fuel its investing machine. However, a month later, SoftBank said it had landed Microsoft and Goldman Sachs on its list of LPs for the second Vision Fund.
It was a welcome boost for SoftBank, as it raises new billions, that its first fund had a good recent quarter. The firm saw liquidity, as well as “unrealized valuation gains” that looked strong. The results weren’t too surprising, considering some of its portfolio companies’ recent successes (think Slack’s direct listing, DoorDash’s fundraising rush, and OYO’s recent investing news), but they were notable all the same. And while we poke at SoftBank’s invest-in-everything strategy, keep in mind its numbers showed specific strengths in its enterprise and consumer deals.
When SoftBank does launch its second, gigantic fund, we’ll see a second wave of investments by the behemoth. Despite its string epic check size and deal stamina, the company does have a few investments that could serve as learning lessons for the second fund
First up, Uber, a huge Vision Fund investment that had a disappointing start to its life as a public company and still is struggling.
The most recent news from the ride-hailing giant comes from its recent second quarter earnings report. The global transportation company – which SoftBank put billions into, making it the company’s largest shareholder – had less revenue than expected and larger losses than anticipated.
Uber must be feeling deflated, to say the least.
SoftBank, in its earnings report, explained that it had an “unrealized loss totaling ¥195,326 million was recorded for the decrease in the fair values of investments in Uber and others.” That means Uber isn’t the only Vision Fund deal that appears weak.
Looking to the future, WeWork, which filed its S-1 publicly yesterday, appears dangerously unprofitable as well (more here). And SoftBank has invested at least $6 billion into the co-working space business over time, and at one point even considered acquiring a majority stake.
But while its Uber bet hasn’t performed well thus far, and the company’s WeWork stake is looking risky, the Vision Fund’s huge (paper) win from its DoorDash bet could allow the investing giant to keep making big bets on unprofitable companies. And, perhaps, cut checks into different sorts of corporate growth risk, deals like this week’s Energy Vault deal.
Illustration: Li-Anne Dias.