SoftBank Vision Fund explained

SoftBank Vision Fund
Type:Private
Industry:Venture Capital
Location:London, England
Founder:Masayoshi Son
Key People:Masayoshi Son (Chairman)Rajeev Misra (CEO)
Products:Investments
Aum:$166 billion
Parent:SoftBank Group
Homepage:www.visionfund.com

The SoftBank Vision Fund is a venture capital fund founded in 2017. It is managed by SoftBank Investment Advisers, a subsidiary of the SoftBank Group. With over $100 billion in capital, it is the world's largest technology-focused investment fund.[1] In 2019, SoftBank Vision Fund 2 was founded.[2] [3] The total fair value of both funds as of 31 March 2021 was $154 billion.[4] [5]

History

The Softbank Vision Fund was created in May 2017 by the SoftBank Group and the Public Investment Fund (PIF).[6] [7] $100 billion was raised with PIF contributing $45 billion, SoftBank contributing $28 billion, the Mubadala Investment Company contributing $15 billion and the rest from other investors including Apple. Through Softbank Vision Fund, Masayoshi Son explained his intent to invest in all companies developing technologies in line with the global artificial intelligence trends, including various sectors such as finance or transportation.[8]

In January 2020, multiple Softbank-funded startups started cutting their staff, such as at Getaround, Oyo, Rappi, Katerra and Zume.[9] In February 2020, Elliott Management, an activist hedge fund, bought a $2.5 billion stake in Softbank and pushed for restructuration and more transparency, especially regarding its Vision Fund.[10] With many portfolio companies of the first fund not performing well and high profile debacles such as the buyout of WeWork after its failed Initial public offering, investor confidence in the Vision Fund fell.[11] [12] In May 2020, Softbank announced the Vision Fund lost $18 billion leading to 15% of the fund's 500 staff being laid off.[13] [14] As a result, the Vision Fund 2 raised less than half of its $108 billion goal with all of it being funded by Softbank itself after failure to secure commitments from external investors.[15]

In May 2021, SoftBank announced the total fair value of both funds as of 31 March 2021 was $154 billion and the Vision Funds made a record profit of $36.99 billion due to its successful investment in Coupang. After announcing the success, SoftBank raised the size of Vision Fund 2 to $30 billion and stated it plans to continue self funding the second fund although it might consider trying again to secure funding from external investors.[16] Also in May 2021, Bloomberg reported that Vision Fund could become public through a $300 million SPAC in 2021, listing in Amsterdam.[17]

In 2022, SoftBank Vision Fund posted a record 3.5 trillion yen loss ($27.4 billion) for its financial year ended on 31 March 2022 as the valuation of its stock portfolio plummeted.[18] The fund's losing investments were massive and both Son, who had claimed he had a special ability to see the future of disruptive entrepreneurship, and SoftBank, received much criticism from shareholders, peers and the business and finance media in general due to the magnitude of the failure.[19]

Costly failures like those of Katerra,[20] Wirecard[21] and Zymergen[22] were just a few examples of SoftBank's reckless investing behaviour and the investing holding company's incompetence, neglect and failure to show due diligence.[23] [24]

In July 2022, CEO Rajeev Misra announced he would be stepping back from some of his main roles including the management of SoftBank Vision Fund 2.[25] Several other executives stepped down from their roles in the same year.[26]

In August 2022, the Vision fund announced a loss of $23.1 billion for the April–June quarter and that it would be planning to cut headcounts.[27] Eric J. Savitz, associate editor for technology at Barron's, characterized the SoftBank Vision Fund as a failed experiment.[28] Masayoshi Son said at the time he was "embarrassed" and "ashamed" when he was confronted with SoftBank Vision Fund's[29] [30] dismal performance and The Wall Street Journal called SoftBank a "big loser"[31] while Bloomberg elaborated on "Masayoshi Son’s broken business model."[32] Son's investing strategy in the first and second SoftBank Vision Funds established in 2017 and 2019, was being described as one reliant on the greater fool theory and the lackluster performance of its investments and Masayoshi Son's presentations in face of that, have been ridiculed by specialized media.[33] [34]

By early 2023, having lost its exuberance[35] due to serious profitability issues[36] and facing declining return on investment prospects[37] as well as record losses,[38] the once world's biggest investor in startups had invested just $300 million into startups in the last October–December quarter, down more than 90% from the previous year.[39] In May 2023, the SoftBank Group disclosed that its Vision Fund lost a record $32 billion in the fiscal year ending in March 2023.[40]

Business overview

SoftBank Vision Fund is managed by SoftBank Investment Advisers and SoftBank Vision Fund 2 is managed by SoftBank Global Advisors. Both are subsidiaries of the SoftBank Group. The firm has an investment team that will evaluate and select companies for the funds to invest in.[41] Investments made mostly are either venture capital or private equity type ones. Most of the investments in Silicon Valley companies have been more than $100 million.[42]

SoftBank Investment Advisers is headquartered in London with additional main offices in Silicon Valley and Tokyo. It also has other offices in Abu Dhabi, Hong Kong, Mumbai, Riyadh, Shanghai and Singapore. The current CEO is Rajeev Misra, who was previously SoftBank's head of strategic finance.

Notable investments

SoftBank Vision Fund's notable investments include:[43]

External links

Notes and References

  1. News: Wong . Jacky . 9 May 2018 . How Much Is the World's Largest Tech Fund Worth to SoftBank? . en-US . Wall Street Journal . 24 June 2021 . 0099-9660 . 9 January 2021 . https://web.archive.org/web/20210109103630/https://www.wsj.com/articles/how-much-is-the-worlds-largest-tech-fund-worth-to-softbank-1525866666 . live .
  2. Web site: SoftBank announces AI-focused second $108 billion Vision Fund with LPs including Microsoft, Apple and Foxconn . 24 June 2021 . TechCrunch . 26 July 2019 . en-US .
  3. Web site: SoftBank's Vision Fund 2: more firepower, bigger questions . 24 June 2021 . Nikkei Asia . en-GB . 20 September 2021 . https://web.archive.org/web/20210920075627/https://asia.nikkei.com/Spotlight/The-Big-Story/SoftBank-s-Vision-Fund-2-more-firepower-bigger-questions . live .
  4. Web site: 12 May 2021 . Softbank just shocked its critics by landing the biggest profit in the history of a Japanese company . 24 June 2021 . CNBC . en . 15 May 2021 . https://web.archive.org/web/20210515161539/https://www.cnbc.com/2021/05/12/softbank-joins-top-corporate-earners-with-its-37-billion-vision-fund-profit.html . live .
  5. Web site: Savitz . Eric J. . SoftBank Boosts Size of Vision Fund 2 to $30 Billion . 24 June 2021 . www.barrons.com . en-US . 25 January 2022 . https://web.archive.org/web/20220125045726/https://www.barrons.com/articles/softbank-boosts-size-of-vision-fund-2-to-30-billion-51620848432 . live .
  6. Web site: Alkhalisi . Zahraa . 6 October 2017 . Where the huge SoftBank-Saudi tech fund is investing . 4 November 2018 . Cnn.com . 12 November 2020 . https://web.archive.org/web/20201112013649/https://money.cnn.com/2017/09/20/technology/softbank-vision-fund-saudi-investments/index.html . live .
  7. News: Merced . Michael J. de la . 14 October 2016 . SoftBank and Saudi Arabia Partner to Form Giant Investment Fund . en-US . The New York Times . 24 June 2021 . 0362-4331 . 25 June 2021 . https://web.archive.org/web/20210625033334/https://www.nytimes.com/2016/10/14/business/dealbook/softbank-and-saudi-arabia-partner-to-form-giant-investment-fund.html . live .
  8. Web site: Benner . Katie . 10 October 2017 . Masayoshi Son's Grand Plan for SoftBank's $100 Billion Vision Fund . 9 November 2018 . . 25 January 2021 . https://web.archive.org/web/20210125003520/https://www.nytimes.com/2017/10/10/technology/masayoshi-son-softbank-vision-fund.html . live .
  9. News: Goel . Vindu . Singh . Karan Deep . Griffith . Erin . 13 January 2020 . Oyo Scales Back as SoftBank-Funded Companies Retreat . The New York Times . 24 June 2021 . 8 December 2020 . https://web.archive.org/web/20201208142704/https://www.nytimes.com/2020/01/13/technology/oyo-hotel-india-softbank.html . live .
  10. News: Merced . Michael J. de la . 6 February 2020 . Elliott Management Is Said to Push for Change at SoftBank . The New York Times . 24 June 2021 . 24 March 2020 . https://web.archive.org/web/20200324060546/https://www.nytimes.com/2020/02/06/business/dealbook/elliott-management-softbank.html . live .
  11. News: Hope . Rolfe Winkler, Liz Hoffman and Bradley . 7 February 2020 . WSJ News Exclusive New SoftBank Tech Fund Falls Far Short of $108 Billion Fundraising Goal . en-US . Wall Street Journal . 10 February 2020 . 0099-9660 . 1 January 2021 . https://web.archive.org/web/20210101082757/https://www.wsj.com/articles/new-softbank-tech-fund-falls-far-short-of-108-billion-fundraising-goal-11581100669 . live .
  12. News: Brown . Maureen Farrell and Eliot . 23 October 2019 . SoftBank to Boost Stake in WeWork in Deal That Cuts Most Ties With Neumann . en-US . Wall Street Journal . 24 June 2021 . 0099-9660 . 30 October 2020 . https://web.archive.org/web/20201030174042/https://www.wsj.com/articles/softbank-to-take-control-of-wework-11571746483 . live .
  13. News: Nussey . Sam . 18 May 2020 . SoftBank's Vision Fund tumbles to $18 billion loss in 'valley of coronavirus' . en . Reuters . 24 June 2021 . 24 June 2021 . https://web.archive.org/web/20210624212340/https://www.reuters.com/article/us-softbank-group-results-idUSKBN22U0KK . live .
  14. Web site: Massoudi . Arash . 10 June 2020 . SoftBank cuts 15% of jobs from Vision Fund arm . 24 June 2021 . www.ft.com . 24 June 2021 . https://web.archive.org/web/20210624205626/https://www.ft.com/content/1fc0f28e-27ef-4891-8451-4d9bc82a0a26 . live .
  15. Web site: Lynn . Alex . 12 May 2021 . SoftBank bets $30bn of its own capital on Vision Fund II . 24 June 2021 . Private Equity International . en-GB . 24 June 2021 . https://web.archive.org/web/20210624205849/https://www.privateequityinternational.com/softbank-bets-30bn-of-its-own-capital-on-vision-fund-ii/ . live .
  16. Web site: SoftBank goes it alone on Vision Fund 2 as portfolio profits leap PitchBook . 24 June 2021 . pitchbook.com . en . 24 June 2021 . https://web.archive.org/web/20210624011006/https://pitchbook.com/news/articles/softbank-earnings-vision-fund-2-fundraising . live .
  17. Web site: GmbH . finanzen net . Softbank's Vision Fund could go public in a $300 million SPAC deal, report says . 2 September 2021 . markets.businessinsider.com . en . 4 September 2021 . https://web.archive.org/web/20210904235241/https://markets.businessinsider.com/news/stocks/softbank-vision-fund-go-public-spac-tech-bloomberg-report-2021-5 . live .
  18. Web site: Kharpal . Arjun . SoftBank Vision Fund posts record $27 billion loss as tech stocks plummet . 11 November 2022 . CNBC . en . 10 November 2022 . https://web.archive.org/web/20221110143957/https://www.cnbc.com/2022/05/12/softbank-vision-fund-posts-record-27-billion-loss-as-tech-stocks-dive.html . live .
  19. Web site: 10 March 2020 . SoftBank's Top 10 Worst Startup Investments - ValueWalk . 20 April 2023 . www.valuewalk.com . en-US . 16 March 2024 . https://web.archive.org/web/20240316031020/https://www.valuewalk.com/softbanks-worst-startup-investments/ . live .
  20. Web site: Journal . Konrad Putzier and Eliot Brown Photographs by Shelby Knowles for The Wall Street . How a SoftBank-Backed Construction Startup Burned Through $3 Billion . 21 April 2023 . WSJ . en-US . 21 April 2023 . https://web.archive.org/web/20230421145613/https://www.wsj.com/articles/how-a-softbank-backed-construction-startup-burned-through-3-billion-11624959000 . live .
  21. Web site: Hoffman . Margot Patrick, Bradley Hope and Liz . WSJ News Exclusive SoftBank Saw Opportunity in Wirecard Before It Unraveled . 21 April 2023 . WSJ . en-US . 16 March 2024 . https://web.archive.org/web/20240316031117/https://www.wsj.com/articles/softbank-saw-opportunity-in-wirecard-before-it-unraveled-11596015040 . live .
  22. Web site: Feldman . Amy . The Inside Story Of How SoftBank-Backed Zymergen Imploded Four Months After Its $3 Billion IPO . 21 April 2023 . Forbes . en . 13 October 2021 . https://web.archive.org/web/20211013105712/https://www.forbes.com/sites/amyfeldman/2021/10/13/the-inside-story-of-how-softbank-backed-zymergen-imploded-four-months-after-its-3-billion-ipo/ . live .
  23. Web site: Resignations keep mounting at SoftBank's $100bn Vision Fund . 21 April 2023 . www.aljazeera.com . en . 21 April 2023 . https://web.archive.org/web/20230421150016/https://www.aljazeera.com/economy/2020/11/2/bbresignations-keep-mounting-at-softbanks-100bn-vision-fund . live .
  24. News: 12 May 2022 . SoftBank to slash investments after $26 billion Vision Fund loss: Masayoshi Son . The Economic Times . 21 April 2023 . 0013-0389 . 21 April 2023 . https://web.archive.org/web/20230421145613/https://economictimes.indiatimes.com/tech/funding/softbank-to-slash-investments-by-more-than-half-this-year-ceo-masayoshi-son/articleshow/91518596.cms . live .
  25. Web site: Kharpal . Arjun . Top SoftBank exec steps back from role at Vision Fund as pressure mounts on investments . 1 August 2022 . CNBC . en . 8 August 2022 . https://web.archive.org/web/20220808110007/https://www.cnbc.com/2022/07/07/top-softbank-exec-rajeev-misra-steps-back-from-role-at-vision-fund.html . live .
  26. News: 4 August 2022 . SoftBank Talent Drain Worsens, Adding Pressure on Son to Deliver . en . Bloomberg.com . 8 August 2022 . 10 August 2022 . https://web.archive.org/web/20220810124333/https://www.bloomberg.com/news/articles/2022-08-04/softbank-talent-drain-worsens-adding-pressure-on-son-to-deliver . live .
  27. News: Nussey . Sam . 8 August 2022 . SoftBank plans Vision Fund job cuts after record net loss . en . Reuters . 8 August 2022 . 8 August 2022 . https://web.archive.org/web/20220808083032/https://www.reuters.com/markets/funds/softbank-posts-23-bln-loss-first-quarter-2022-08-08/ . live .
  28. Web site: Savitz . Eric J. . The SoftBank Experiment Has Failed. Here's What Comes Next. . 11 November 2022 . www.barrons.com . en-US . 11 November 2022 . https://web.archive.org/web/20221111111639/https://www.barrons.com/articles/softbank-stock-price-private-51660337102 . live .
  29. Web site: 8 August 2022 . SoftBank CEO 'ashamed' of pride in past profits as record losses prompt cost cuts . 11 November 2022 . the Guardian . en . 23 November 2022 . https://web.archive.org/web/20221123074401/https://www.theguardian.com/business/2022/aug/08/softbank-vision-funds-cuts-loss-arm . live .
  30. Web site: SoftBank suffers as Son's bets on China tech backfire . 11 November 2022 . Nikkei Asia . en-GB . 10 November 2022 . https://web.archive.org/web/20221110003637/https://asia.nikkei.com/Opinion/SoftBank-suffers-as-Son-s-bets-on-China-tech-backfire . live .
  31. News: Brown . Eliot . 2 August 2022 . SoftBank Emerges as a Big Loser of the Tech Downturn. Again. . en-US . Wall Street Journal . 0099-9660 . 26 September 2022 . 26 September 2022 . https://web.archive.org/web/20220926134758/https://www.wsj.com/articles/softbank-tech-downturn-startups-losses-vision-fund-masayoshi-son-11659456842 . live .
  32. News: SoftBank's Epic Losses Reveal Masayoshi Son's Broken Business Model . en . Bloomberg.com . 11 November 2022 . 2 October 2022 . https://web.archive.org/web/20221002143211/https://www.bloomberg.com/news/articles/2022-08-23/softbank-s-23-billion-loss-looks-like-more-wework-fun . live .
  33. Web site: Williams . Oscar . 11 August 2022 . The dangerous approach of SoftBank's Masayoshi Son . 2 September 2022 . New Statesman . en-US . 2 September 2022 . https://web.archive.org/web/20220902123928/https://www.newstatesman.com/business/2022/08/softbank-masayoshi-son . live .
  34. News: 10 November 2022 . Some suggested slides for SoftBank . Financial Times . 11 November 2022 . 11 November 2022 . https://web.archive.org/web/20221111091828/https://www.ft.com/content/228162ad-b224-40ce-b3c6-7ca75de9aee4 . live .
  35. News: 7 February 2023 . Breakingviews - SoftBank is paying for Son's past exuberance . en . Reuters . 12 February 2023 . 12 February 2023 . https://web.archive.org/web/20230212115045/https://www.reuters.com/breakingviews/softbank-is-paying-sons-past-exuberance-2023-02-07/ . live .
  36. Web site: Linares . Maria Gracia Santillana . SoftBank Puts Blockchain Investments On Ice As Part Of Startup Pullback . 25 February 2023 . Forbes . en . 25 February 2023 . https://web.archive.org/web/20230225013733/https://www.forbes.com/sites/digital-assets/2023/02/23/softbank-puts-blockchain-investments-on-ice-as-part-of-startup-pullback/ . live .
  37. News: 15 February 2023 . SoftBank's future rests on Arm . Financial Times . 15 February 2023 . 15 February 2023 . https://web.archive.org/web/20230215004715/https://www.ft.com/content/3b415060-13f1-4248-9d36-fe6c2bf0c879 . live .
  38. Web site: Chowdhury . Hasan . SoftBank's founder compared himself to Jesus and Yoda. His tech fund lost a record $32 billion this year. . 19 May 2023 . Business Insider . en-US . 19 May 2023 . https://web.archive.org/web/20230519002933/https://www.businessinsider.com/softbank-ceo-likened-to-jesus-suffers-32-billion-fund-loss-2023-5 . live .
  39. Web site: Cheung . Jayde . Masayoshi Son's SoftBank Vision Fund Posts $5.5 Billion Quarterly Loss, Pulls Back On Startup Investments . 12 February 2023 . Forbes . en . 12 February 2023 . https://web.archive.org/web/20230212123654/https://www.forbes.com/sites/jaydecheung/2023/02/12/masayoshi-sons-softbank-vision-fund-posts-55-billion-quarterly-loss-pulls-back-on-startup-investments/ . live .
  40. Web site: 11 May 2023 . SoftBank Vision Fund Posts Record Loss Despite Masayoshi Son Foreseeing Disaster . 13 May 2023 . Observer . en-US . 12 May 2023 . https://web.archive.org/web/20230512085840/https://observer.com/2023/05/softbank-vision-fund-loss-2022/ . live .
  41. Web site: SoftBank Investment Advisers Investor Profile: Portfolio & Exits PitchBook . 24 June 2021 . pitchbook.com . en . 24 June 2021 . https://web.archive.org/web/20210624210853/https://pitchbook.com/profiles/investor/182433-16 . live .
  42. Web site: 11 October 2018 . SOFTBANK IS TAKING OVER TECH . AngelList . 24 June 2021 . 29 January 2023 . https://web.archive.org/web/20230129060359/https://angel.co/newsletters/softbank-is-taking-over-tech-101118 . live .
  43. Web site: Portfolio Companies . live . https://web.archive.org/web/20230505171511/https://visionfund.com/portfolio . 5 May 2023 . 6 May 2023 . SoftBank Vision Fund.
  44. Web site: Softbank Leads $200M Investment Into Printable Battery-Free IoT Startup Wiliot. Forbes. 8 July 2022. John Koetsier. 27 July 2021. 6 July 2022. https://web.archive.org/web/20220706221112/https://www.forbes.com/sites/johnkoetsier/2021/07/27/softbank-leads-200m-investment-into-printable-battery-free-iot-startup-wiliot/. live.

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