With $865 Million Invested In Katerra’s Series D, SoftBank Shows Increased Interest In Infrastructure Startups

SoftBank is well known for its interest in making big bets. And the latest to take a cut of SoftBank’s $100 billion hoard is California-based Katerra. According to its Crunchbase profile, the startup, founded in 2015, optimizes “every aspect of building development, design, and construction.”

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Since its inception, Katerra has attracted large sums of money. As part of its Series A, the company raised a hefty $75.3 million. A year later, Katerra announced a $130 million Series C led by Greenoaks Capital, with Foxconn Technology Group, Khosla Ventures, DFJ Growth, and four others participating in the round. However, the startup’s SoftBank-led $865 million Series D dwarfs previous sums raised, and sets the value of the company, according to co-founder Michael Marks, at $3 billion. It is also, so far, the largest venture deal of 2018.

Who Needs An Infrastructure Bill When You Have SoftBank?

However, while Katerra is notable for its massive new funding round, it’s not the only startup in the construction and building space to garner interest from investors. View Inc, for instance, raised $100 million in 2017 for its intelligent architectural glass.

Regarding interest from investors in the space, Augury founder Saar Yoskovitz told Crunchbase News more about the smart building sector in early 2017:

“There’s been an uptick in interest from investors, as well as in the number of competitors. We were pulled into the fundraising process earlier than we expected because all of the large financial firms in the Valley started asking questions about this market,” he said. “But at the same time, most of their feedback was that this market is still young and playing out. A lot of them don’t have a thesis yet and are not necessarily ready to place a bet on it.”

Whether SoftBank’s investment definitively shows a maturation in the construction startup market and its adjacent sectors is not clear. But, at least for SoftBank, it’s not the first large deal in infrastructure-like projects. The company’s vision fund, which has $100 billion to offer up to startups, has dedicated 15 percent of its investment fund to funding Saudi Arabia’s solar energy ambitions, as Jason Rowley reported on in November 2017. In the same report, SoftBank, the parent company, also invested an additional $15 billion in NEOM, Saudi Arabia’s ambitious city-building project.

How SoftBank the parent company and its Vision Fund operate together is not known. However, Katerra would be well situated to take advantage of the relationship, assuming one exists at all. After all, building a whole new city at the whims of a prince will require a few bricks.

SoftBank’s Vision Fund has also made significant bets on other infrastructure projects. In a private equity deal, OneWeb, according to Crunchbase, raised $1.2 billion from SoftBank in a private equity deal. The company aims to “provide global high-speed, low latency broadband access” via satellites. Its ambitions here are reminiscent of the broadband build out of the 90s.

The world’s largest investment fund has also placed big bets on agriculture. In July of 2017, the Vision Fund led a $200 million Series B round in Plenty. The SF-based startup intends to lead the way on indoor farming, growing food without the use of pesticides. It’s a space that has massive potential, given that much of the world’s arable land is rapidly decreasing due to climate change.

Overall, SoftBank, when it decides to deploy money, isn’t shy about investing a hell of a lot of it. And as pointed in a Crunchbase News overview of the fund, this is not surprising. If the Vision Fund intends to make massive returns, it needs to make massive bets—necessarily precluding it from bothering with seed and early-stage startups. And as pointed out in Crunchbase News’s prior coverage of the SoftBank Vision fund, “even if the global venture capital and private equity markets continue to recover from their mid-2016 lows, and there are more of these quarter-billion-plus rounds, it’s still going to be difficult to invest that capital judiciously.”

That leaves Softbank looking to invest in startups that operate in traditionally capital-intensive sectors such as construction, agriculture, and energy. Katerra is the latest example of that.

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