SoftBank Confirm Vision Fund 2; Emma Succeeding Through Sustainable Models

Vision Fund 2

DTC’s Daily Digest brings you the latest news on the world’s fastest growing direct-to-consumer brands. In today’s edition: SoftBank confirm Vision Fund 2; Emma succeeding through sustainable models; and VC funding boom in the US, as China falters.

SoftBank confirm Vision Fund 2

SoftBank has announced the planned establishment of Vision Fund 2, the successor to their lucrative Vision Fund. The new fund will total at least USD$108bn (£89bn), making this sequel larger than its predecessor. 

SoftBank’s first Vision Fund’s epic size, large checks, and rapid-fire investment strategy shook the private markets. Companies of all sorts accepted money from Vision Fund 1 including Slack, DoorDash, Uber, and WeWork. 

While news had swirled that SoftBank was struggling to find the capital for Vision Fund 2, the Japanese conglomerate did find sufficient limited partnerships (LPs) to fund its new weapon.

SoftBank won’t just deploy other peoples’ money, however. It will put about USD$38bn of its own money into the second Vision Fund, making it an anchor LP of the investment effort. SoftBank is, therefore, making a large, public double-down on its own strategy and vision for the future.

Those who have supported Vision Fund 2 include Apple, Microsoft, Standard Chartered, and even the National Investment Corporation of National Bank of Kazakhstan. With SoftBank investing in exciting smaller startups, as well as huge international businesses, DTCs looking to scale internationally will want to keep an eye on this. 

Emma succeeding through sustainable models

Emma Mattress has generated £18 million revenue in the first half of 2019 thanks to its “sustainable business model”.

The online bedding and mattress retailer said it was on track to achieve £45 million revenue this year, which is a growth of 173% from 2018. 

“Emma’s 316% year-on-year growth is a testament to our profitable and sustainable business model, which focuses on product quality and clearly communicating product differentiation and function,” Emma Mattress co-founder Benjamin Quiroga-Rivera said.

“We’re sceptical of adopting unsustainable strategies and believe we have found the right recipe for long-term success. Our strong H1 2019 results are further evidence that we’re on the right track and put Emma Mattress on course to solidify its position as the UK’s leading bed-in-box-brand”.

As of July 19, Emma Mattress has sold over 400,000 mattresses on a profitable basis via its worldwide online channels. The retailer said it would reveal a new partnership with one of the UK’s leading retailers by the end of July. This collaboration will increase Emma Mattress’ retail presence to over 200 stores across the country. 

Quiroga-Rivera spoke to DTC Daily back in March to discuss how Emma was standing out in the crowded DTC mattress space.

VC funding boom in the US, as China falters

Data from the last two quarters shows that a growing share of global VC funding is going to North America. This is a change from the prevailing trend for the last few years, which has seen VC money flowing to China.

However, so far in 2019, North American startups have pulled in 49% of total global investment. It’s a particularly sharp rise in comparison to year-ago quarterly totals. In Q2 of 2018, American and Canadian startups pulled in just 37% of global investment. In Q1 of 2018, the figure was only a couple points higher.

The cause is a Chinese slow down, with total dollars flowing to North American startups fairly flat. Meanwhile, the Chinese startup scene is experiencing a dramatic deceleration. Out of the tens of billions of VC dollars invested worldwide in Q2 2019, Chinese startups accounted for approximately 15% of the total. 

That’s down markedly from the past quarter, and is a fraction of what it was in Q2 last year. China’s share of the world’s supergiant rounds – venture rounds of USD$100m (£82m) or more – has also fallen from its world-leading position in 2016 to third place in 2019.