SoftBank uses "capital as a weapon," posing one of the biggest challenges corporate boards have ever had to face, said Bill Gurley, whose venture firm, Benchmark, is one of the largest investors in Uber and WeWork.
"If they enter your market, I don't care what industry you're in and I don't care if they invest in you. If they invest in a competitor, you're engaged in a game," Gurley said on Tuesday on CNBC's "Halftime Report." He was referring to SoftBank's Vision Fund, which has $100 billion and has taken big stakes in Uber, WeWork, Slack and many others.
SoftBank has gained a reputation for picking winners and pumping capital into them to choke off the competition. The Japanese company, led by Masayoshi Son, announced in July that it's launching its second mega fund focused on tech companies creating artificial intelligence. The new fund stands at around $108 billion, according to SoftBank, with the firm planning to contribute $38 billion.
While Benchmark is investing in capital-intensive businesses, Gurley said he likes industries that are less exposed to price competition, like social media. When it comes to companies that require constant cash, you have to consider whether to take SoftBank's money, even if you don't want it.
"If you're on the boards of these companies, choosing not to engage is ceding the field," Gurley said. "So I think it's one of the toughest things a board has ever had to analyze. Any board in the history of business, no one's faced this."
Appearing alongside Gurley on "Halftime Report," Brad Gerstner, the founder of Altimeter Capital, said, "I hope they shelf the idea for Vision 2." Gerstner said SoftBank is poised to continue "what I think is a dangerous game of investing in competitor companies and pitting them against one another."
"SoftBank's a huge investor in DoorDash, they're a huge investor in Uber, those two are smashing it out," Gerstner said. "It's leading to huge burns. I don't think that's a net positive for Silicon Valley, I don't think it's a net positive for those companies, I don't think it's a net positive for SoftBank."