Alto Pharmacy has raised $250 million from investors, including SoftBank's second Vision Fund, three people familiar with the matter told CNBC.
The investment has already been approved by the Vision Fund's investment committee, meaning it's a done deal, the sources said. It also marks one of the first handful of known bets from SoftBank's new fund. The deal values the company at more than $700 million, according to one of the people.
The news was previously reported by Reuters.
SoftBank's Vision Fund has already done just over half a dozen deals in the health and life sciences sector, including 10x Genomics, which subsequently went public, and employer health-focused Collective Health. It has several venture partners dedicated to the space, with Silicon Valley-based Deep Nishar taking the most active interest in health care.
Alto represents its first foray into pharmacy. The market opportunity is massive, given that the U.S. alone spends more than $330 billion on prescription drugs. But it's highly complex, and there are incumbents including the pharmacy benefits managers, which negotiate drug prices on behalf of insurers and employers, that have done battle with upstarts.
Alto was founded in 2015 by former Facebook employees. It competes with Capsule Pharmacy in New York and PillPack, which is owned by Amazon but has focused much of its effort in California.
It has a physical pharmacy in the Dogpatch area of San Francisco, but the majority of its users request that their meds are delivered the same day to their home or office for free. The company says it will work with doctors to find its users a more affordably priced drug. It also acquired a start-up in 2017 that created a "smart" bottle that reminds people when to take their medications.
Alto also offers a team of pharmacists that can provide advice after prescriptions are ordered.
SoftBank said in July that it planned to raise $108 billion for its second fund, dubbed Vision Fund 2, with investments from companies including Apple, Foxconn and Microsoft. Not all of these contributors are confirmed to invest, but the company is still focused on raising more than $100 billion. The first fund, which raised $100 billion, is looking to use remaining funds for follow-on investments in existing companies.
SoftBank CEO Masayoshi Son has told partners that he hopes to focus on companies with a clearer path to profitability. That follows the fund's experiences with Uber and WeWork, which went public without a clear path to profitability and garnered a negative reaction from the public market.
SoftBank has recently backed away from investing in several start-ups, including home-care provider Honor, after submitting term sheets worth hundreds of millions of dollars, according to Axios. That's unusual behavior for an investor.
Other investors in the Alto round included Greenoaks Capital, Jackson Square Ventures, Olive Tree Capital, and Zola Global, the people said.