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SoftBank Vision Fund

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SoftBank Vision Fund
Company typePrivate
IndustryVenture Capital
Founded2017; 7 years ago (2017)
FounderMasayoshi Son
HeadquartersLondon, England
Key people
Masayoshi Son (Chairman) Rajeev Misra (CEO)
ProductsInvestments
AUM$134 billion (June 2023)[1]
ParentSoftBank Group
Websitewww.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.[2] In 2019, SoftBank Vision Fund 2 was founded.[3][4]

History

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The Softbank Vision Fund was created in May 2017 by the SoftBank Group and the Public Investment Fund (PIF).[5][6] $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.[5] 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.[7]

As of early February 2019, the Vision Fund had built up a 4.9% position in Nvidia stock,[8] and then was forced to sell all those shares when a prolonged plunge in Nvidia's stock price threatened to endanger the fund's overall performance.[9] Over a six-month period, the fund had set up a collar strategy around its Nvidia stock, thereby protecting itself from a severe price drop which began in October 2018 but also limiting its ability to profit from any rise in Nvidia's stock price.[8] At the time, the Vision Fund recorded a $3.3 billion return on its Nvidia investment.[8] Unfortunately, the fund's February 2019 closeout of its Nvidia position preceded the AI boom and Nvidia's rapid transformation into one of the world's most valuable companies.[9] By June 2024, the market value of those shares had exceeded $150 billion, causing Son to publicly remark that "the fish that got away was big".[9]

In January 2020, multiple Softbank-funded startups started cutting their staff, such as at Getaround, Oyo, Rappi, Katerra and Zume.[10] 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.[11] 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.[12][13] In May 2020, Softbank announced the Vision Fund lost $18 billion leading to 15% of the fund's 500 staff being laid off.[14][15] 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.[12][16]

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.[17] 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.[17][18][19] Also in May 2021, Bloomberg reported that Vision Fund could become public through a $300 million SPAC in 2021, listing in Amsterdam.[20]

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.[21] 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.[22]

Costly failures like those of Katerra,[23] Wirecard[24] and Zymergen[25] 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.[26][27]

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.[28] Several other executives stepped down from their roles in the same year.[29]

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.[30] Eric J. Savitz, associate editor for technology at Barron's, characterized the SoftBank Vision Fund as a failed experiment.[31] Masayoshi Son said at the time he was "embarrassed" and "ashamed" when he was confronted with SoftBank Vision Fund's[32][33] dismal performance and The Wall Street Journal called SoftBank a "big loser"[34] while Bloomberg elaborated on "Masayoshi Son’s broken business model."[35] 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.[36][37]

By early 2023, having lost its exuberance[38] due to serious profitability issues[39] and facing declining return on investment prospects[40] as well as record losses,[41] 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.[42] In May 2023, the SoftBank Group disclosed that its Vision Fund lost a record $32 billion in the fiscal year ending in March 2023.[43]

Business overview

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SoftBank Vision Fund is managed by SoftBank Investment Advisers and SoftBank Vision Fund 2 is managed by SoftBank Global Advisors.[28] Both are subsidiaries of the SoftBank Group.[28] The firm has an investment team that will evaluate and select companies for the funds to invest in.[44] 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.[45]

SoftBank Investment Advisers is headquartered in London[6][44] 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.[6]

Notable investments

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SoftBank Vision Fund's notable investments include:[46]

References

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  1. ^ Govil, Navneet. "Investor Briefing: SoftBank Vision & LatAm Funds" (PDF). Softbank.
  2. ^ Wong, Jacky (9 May 2018). "How Much Is the World's Largest Tech Fund Worth to SoftBank?". Wall Street Journal. ISSN 0099-9660. Archived from the original on 9 January 2021. Retrieved 24 June 2021.
  3. ^ "SoftBank announces AI-focused second $108 billion Vision Fund with LPs including Microsoft, Apple and Foxconn". TechCrunch. 26 July 2019. Retrieved 24 June 2021.
  4. ^ "SoftBank's Vision Fund 2: more firepower, bigger questions". Nikkei Asia. Archived from the original on 20 September 2021. Retrieved 24 June 2021.
  5. ^ a b Alkhalisi, Zahraa (6 October 2017). "Where the huge SoftBank-Saudi tech fund is investing". Cnn.com. Archived from the original on 12 November 2020. Retrieved 4 November 2018.
  6. ^ a b c Merced, Michael J. de la (14 October 2016). "SoftBank and Saudi Arabia Partner to Form Giant Investment Fund". The New York Times. ISSN 0362-4331. Archived from the original on 25 June 2021. Retrieved 24 June 2021.
  7. ^ Benner, Katie (10 October 2017). "Masayoshi Son's Grand Plan for SoftBank's $100 Billion Vision Fund". The New York Times. Archived from the original on 25 January 2021. Retrieved 9 November 2018.
  8. ^ a b c Negishi, Mayumi (6 February 2019). "SoftBank Sells Entire Nvidia Stake". The Wall Street Journal.
  9. ^ a b c Fujikawa, Megumi (21 June 2024). "SoftBank Chief Rues Selling Nvidia Stake and Missing Out on $150 Billion". The Wall Street Journal.
  10. ^ Goel, Vindu; Singh, Karan Deep; Griffith, Erin (13 January 2020). "Oyo Scales Back as SoftBank-Funded Companies Retreat". The New York Times. Archived from the original on 8 December 2020. Retrieved 24 June 2021.
  11. ^ Merced, Michael J. de la (6 February 2020). "Elliott Management Is Said to Push for Change at SoftBank". The New York Times. Archived from the original on 24 March 2020. Retrieved 24 June 2021.
  12. ^ a b 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". Wall Street Journal. ISSN 0099-9660. Archived from the original on 1 January 2021. Retrieved 10 February 2020.{{cite news}}: CS1 maint: multiple names: authors list (link)
  13. ^ Brown, Maureen Farrell and Eliot (23 October 2019). "SoftBank to Boost Stake in WeWork in Deal That Cuts Most Ties With Neumann". Wall Street Journal. ISSN 0099-9660. Archived from the original on 30 October 2020. Retrieved 24 June 2021.
  14. ^ Nussey, Sam (18 May 2020). "SoftBank's Vision Fund tumbles to $18 billion loss in 'valley of coronavirus'". Reuters. Archived from the original on 24 June 2021. Retrieved 24 June 2021.
  15. ^ Massoudi, Arash (10 June 2020). "SoftBank cuts 15% of jobs from Vision Fund arm". www.ft.com. Archived from the original on 24 June 2021. Retrieved 24 June 2021.
  16. ^ Lynn, Alex (12 May 2021). "SoftBank bets $30bn of its own capital on Vision Fund II". Private Equity International. Archived from the original on 24 June 2021. Retrieved 24 June 2021.
  17. ^ a b "Softbank just shocked its critics by landing the biggest profit in the history of a Japanese company". CNBC. 12 May 2021. Archived from the original on 15 May 2021. Retrieved 24 June 2021.
  18. ^ Savitz, Eric J. "SoftBank Boosts Size of Vision Fund 2 to $30 Billion". www.barrons.com. Archived from the original on 25 January 2022. Retrieved 24 June 2021.
  19. ^ "SoftBank goes it alone on Vision Fund 2 as portfolio profits leap | PitchBook". pitchbook.com. Archived from the original on 24 June 2021. Retrieved 24 June 2021.
  20. ^ GmbH, finanzen net. "Softbank's Vision Fund could go public in a $300 million SPAC deal, report says". markets.businessinsider.com. Archived from the original on 4 September 2021. Retrieved 2 September 2021.
  21. ^ Kharpal, Arjun (12 May 2022). "SoftBank Vision Fund posts record $27 billion loss as tech stocks plummet". CNBC. Archived from the original on 10 November 2022. Retrieved 11 November 2022.
  22. ^ "SoftBank's Top 10 Worst Startup Investments - ValueWalk". www.valuewalk.com. 10 March 2020. Archived from the original on 16 March 2024. Retrieved 20 April 2023.
  23. ^ Journal, Konrad Putzier and Eliot Brown | Photographs by Shelby Knowles for The Wall Street. "How a SoftBank-Backed Construction Startup Burned Through $3 Billion". WSJ. Archived from the original on 21 April 2023. Retrieved 21 April 2023.
  24. ^ Hoffman, Margot Patrick, Bradley Hope and Liz. "WSJ News Exclusive | SoftBank Saw Opportunity in Wirecard Before It Unraveled". WSJ. Archived from the original on 16 March 2024. Retrieved 21 April 2023.{{cite web}}: CS1 maint: multiple names: authors list (link)
  25. ^ Feldman, Amy. "The Inside Story Of How SoftBank-Backed Zymergen Imploded Four Months After Its $3 Billion IPO". Forbes. Archived from the original on 13 October 2021. Retrieved 21 April 2023.
  26. ^ "Resignations keep mounting at SoftBank's $100bn Vision Fund". www.aljazeera.com. Archived from the original on 21 April 2023. Retrieved 21 April 2023.
  27. ^ "SoftBank to slash investments after $26 billion Vision Fund loss: Masayoshi Son". The Economic Times. 12 May 2022. ISSN 0013-0389. Archived from the original on 21 April 2023. Retrieved 21 April 2023.
  28. ^ a b c Kharpal, Arjun (7 July 2022). "Top SoftBank exec steps back from role at Vision Fund as pressure mounts on investments". CNBC. Archived from the original on 8 August 2022. Retrieved 1 August 2022.
  29. ^ "SoftBank Talent Drain Worsens, Adding Pressure on Son to Deliver". Bloomberg.com. 4 August 2022. Archived from the original on 10 August 2022. Retrieved 8 August 2022.
  30. ^ Nussey, Sam (8 August 2022). "SoftBank plans Vision Fund job cuts after record net loss". Reuters. Archived from the original on 8 August 2022. Retrieved 8 August 2022.
  31. ^ Savitz, Eric J. "The SoftBank Experiment Has Failed. Here's What Comes Next". www.barrons.com. Archived from the original on 11 November 2022. Retrieved 11 November 2022.
  32. ^ "SoftBank CEO 'ashamed' of pride in past profits as record losses prompt cost cuts". the Guardian. 8 August 2022. Archived from the original on 23 November 2022. Retrieved 11 November 2022.
  33. ^ "SoftBank suffers as Son's bets on China tech backfire". Nikkei Asia. Archived from the original on 10 November 2022. Retrieved 11 November 2022.
  34. ^ Brown, Eliot (2 August 2022). "SoftBank Emerges as a Big Loser of the Tech Downturn. Again". Wall Street Journal. ISSN 0099-9660. Archived from the original on 26 September 2022. Retrieved 26 September 2022.
  35. ^ "SoftBank's Epic Losses Reveal Masayoshi Son's Broken Business Model". Bloomberg.com. Archived from the original on 2 October 2022. Retrieved 11 November 2022.
  36. ^ Williams, Oscar (11 August 2022). "The dangerous approach of SoftBank's Masayoshi Son". New Statesman. Archived from the original on 2 September 2022. Retrieved 2 September 2022.
  37. ^ "Some suggested slides for SoftBank". Financial Times. 10 November 2022. Archived from the original on 11 November 2022. Retrieved 11 November 2022.
  38. ^ "Breakingviews - SoftBank is paying for Son's past exuberance". Reuters. 7 February 2023. Archived from the original on 12 February 2023. Retrieved 12 February 2023.
  39. ^ Linares, Maria Gracia Santillana. "SoftBank Puts Blockchain Investments On Ice As Part Of Startup Pullback". Forbes. Archived from the original on 25 February 2023. Retrieved 25 February 2023.
  40. ^ "SoftBank's future rests on Arm". Financial Times. 15 February 2023. Archived from the original on 15 February 2023. Retrieved 15 February 2023.
  41. ^ Chowdhury, Hasan. "SoftBank's founder compared himself to Jesus and Yoda. His tech fund lost a record $32 billion this year". Business Insider. Archived from the original on 19 May 2023. Retrieved 19 May 2023.
  42. ^ Cheung, Jayde. "Masayoshi Son's SoftBank Vision Fund Posts $5.5 Billion Quarterly Loss, Pulls Back On Startup Investments". Forbes. Archived from the original on 12 February 2023. Retrieved 12 February 2023.
  43. ^ "SoftBank Vision Fund Posts Record Loss Despite Masayoshi Son Foreseeing Disaster". Observer. 11 May 2023. Archived from the original on 12 May 2023. Retrieved 13 May 2023.
  44. ^ a b "SoftBank Investment Advisers Investor Profile: Portfolio & Exits | PitchBook". pitchbook.com. Archived from the original on 24 June 2021. Retrieved 24 June 2021.
  45. ^ "SOFTBANK IS TAKING OVER TECH". AngelList. 11 October 2018. Archived from the original on 29 January 2023. Retrieved 24 June 2021.
  46. ^ "Portfolio Companies". SoftBank Vision Fund. Archived from the original on 5 May 2023. Retrieved 6 May 2023.
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