SoftBank backing would be good news for San Francisco-based Honor and its partners but also underscores that home care — considered by many people in senior living to be the industry’s biggest competition — is being transformed by tech innovators who are supported by increasingly vast amounts of capital.
SoftBank Vision Fund 2 and Honor have been involved in talks, but the deal has not been approved by the fund’s investment committee and may not come to pass, CNBC reported, citing unnamed sources “familiar with the matter.”
SoftBank did not immediately respond to a request for comment from Senior Housing News on Thursday. Honor declined to comment.
SoftBank’s first Vision Fund made investments in high-profile companies like Uber and infamously bet on WeWork. Following Vision Fund investments of more than $10 billion, Tokyo-based SoftBank Group in October struck a $9.5 billion bailout deal to acquire 80% of the co-working company. WeWork’s valuation had cratered after the company filed documents in advance of a planned initial public offering (IPO).
As the WeWork saga was playing out, SoftBank was raising capital for Vision Fund 2, with a goal of $108 billion. With this fund, SoftBank Founder and CEO Masayoshi Son wants to focus on companies that have a clearer path to profitability, according to CNBC.
With this as the backdrop, a Vision Fund investment in Honor is yet another signal that senior care disruption could be on the way, as the world’s most ambitious and richest venture capital funds turn their sights to the space.
The ramifications of this trend for the senior living industry are not entirely clear, but home care has commanded early attention from potential disruptors. Honor was one of several VC-backed startups to emerge in the last five years that aimed to use technology to provide more efficient and consumer-friendly home care.
Some of these startups hit roadblocks and folded, but Honor shifted its strategy. Now, it is focusing on leveraging its capabilities in staff recruitment and scheduling to partner with existing home care agencies in profit-sharing joint ventures. Honor has raised more than $100 million in VC capital already and has a presence in California, Texas, New Mexico, Arizona, Ohio, and Michigan.
Eskaton was one of Honor’s early partners on the senior living side. After initial challenges, Honor has helped drive more revenue to Eskaton’s home care business while supporting the provider’s growth in new markets.
This partnership shows how home care innovation is supporting a well-established senior living provider like Eskaton, which has a market stronghold in Sacramento and is expanding in California. However, industry leaders have warned that coming disruption could ultimately wreak havoc.
For example, Amazon has also made incursions into health care and real estate, potentially putting the pieces in place to allow boomers to age in their own homes for longer periods of time, which would dampen demand for congregate senior housing.
“I think we’d be foolish to think they aren’t working on plans to disrupt the industry in some form,” incoming Merrill Gardens President Tana Gall recently told SHN. “Our industry is too big, and what’s coming down the pike is too big, for smart people not to be thinking about that.”
SoftBank Vision Fund 2 is still fundraising and no specific investments will be announced until that process has been completed, CNBC reported.