SoftBank founder and CEO Masayoshi Son confirmed that his $100 billion Vision Fund recent poor performance and mounting bad news has spooked investors in his future mega fund.
The Japanese group’s operating profits tumbled 99% in the third quarter compared to the same period a year earlier, to $23.6 million, and the Vision Fund was the main driver of those losses. The investment vehicle, created in 2017 to infuse capital on technology startups, reported an operating loss of $2 billion.
“In light of [the losses from] WeWork and other problems we’ve had, I’m thinking of restarting [the second fund] at a smaller scale with bridge funding and taking on a bigger challenge after building a new track record,” Mr Son told a press conference in Tokyo.
Last year, SoftBank had announced it had reached memorandums of understanding with various partners to form Vision Fund 2. The company said at the time that it expected to raise $108 billion from companies such as Apple, Microsoft, Foxconn and Standard Chartered.
WeWork’s failed attempt at going public and Uber’s declining stock prices “have caused concern amongst potential investors in SoftBank Vision Fund 2,” Son said. SoftBank spent roughly $10 billion rescuing WeWork last fall and Uber’s share price lost roughly 8% of its value since its public debut in May — despite a recovery during the last weeks.
“At the moment, I think that our next fund size should be a little bit smaller, because we have caused concerns and anxiety to a lot of people,” Son said. SoftBank has committed $38 billion to the Vision Fund 2 but now its launch will almost certainly be delayed.
The Japanese group is also feeling the pressure from the activist fund Elliott Management, which had amassed a $2.5 billion stake in SoftBank and called for the conglomerate to provide more transparency on the Vision Fund’s investments and overhaul its governance.