SoftBank looking to fund tech-focused ventures

Japan's SoftBank Group, in partnership with Saudi Arabia's public investment fund, recently announced a global technology fund of $100 billion.

The fund would be used over the next five years to support technology-focused ventures that are potentially influential.

By tying itself to a tech-only fund, SoftBank is looking to back start-ups that turn out to be multi-billion-dollar companies and change the way of life.

Experts say that while non-tech businesses also scale, technology scales like nothing else.

A simple social media platform can increase its customer base from 1 million to 100 million without even increasing its team size.

Tech businesses can go from "Minimum Viable Product" to a world changing one in a few years.

So, investors feel tech is the best field to look for growth.

Winners and losers of tech businesses look similar at an early stage.

Both successful and unsuccessful tech start-ups look equally healthy at some point.

Investing in tech businesses is like buying an option; after the first round, investors can carefully observe potential winners and support them.

So, buying a lot of options helps investors diversify the risk along with catching the big winners.

SoftBank's fund would offer more support for the potentially game-changing but risky ideas.

But, backing from a player like SoftBank insulates entrepreneurs from vagaries.

The large fund improves investors' chances of catching mega winners while simultaneously improving their prospects.

But, there are dangers of huge money being in the hands of a single team; so, SoftBank should build the right culture and management frameworks.