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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$154 billion (31 March 2021)
ParentSoftBank Group
Websitewww.visionfund.com

The SoftBank Vision Fund is a venture capital fund founded in 2017 that is part 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.[6] 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 July 2019, SoftBank announced the creation of SoftBank Vision Fund 2 with investors from technology companies such as Microsoft, Apple and Foxconn as well as financial service companies such as Standard Chartered, Mizuho Bank, Sumitomo Mitsui Banking Corporation and MUFG Bank.[2][3] The National Investment Corporation of National Bank of Kazakhstan was also an investor.[2][3] Saudi Arabia was not an investor in the second fund.[2] The fund was reported to focus on AI-based technology and reach an investment of approximately $108 billion, of which $38 billion would come from Softbank itself.[2]

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.[11][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.[4] 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.[4][5][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]

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.[19] Several other executives stepped down from their roles in the same year.[20]

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.[21] Eric J. Savitz, associate editor for technology at Barron's, characterized the SoftBank Vision Fund as a failed experiment.[22] Masayoshi Son said at the time he was “embarrassed” and “ashamed” when he was confronted with SoftBank Vision Fund's[23][24] dismal performance and The Wall Street Journal called SoftBank a “big loser"[25] while Bloomberg elaborated on “Masayoshi Son’s broken business model."[26] 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.[27][28]

Business overview

SoftBank Vision Fund is managed by SoftBank Investment Advisers and SoftBank Vision Fund 2 is managed by SoftBank Global Advisors.[19] Both are subsidiaries of the SoftBank Group.[19] The firm has an investment team that will evaluate and select companies for the funds to invest in.[29] 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.[30]

SoftBank Investment Advisers is headquartered in London[7][29] 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.[7]

The largest investor of the first Vision Fund is the Public Investment Fund of Saudi Arabia contributing $45 billion of the $100 billion fund.[6] Other investors include Softbank, Mubadala as well as technology firms, Foxconn, Qualcomm, Sharp and Apple.[31] The second Vision Fund is solely funded by Softbank itself after failure to secure commitment from external investors due to underwhelming performance of its predecessor.[5][15][16]

Notable investments

References

  1. ^ Wong, Jacky (2018-05-09). "How Much Is the World's Largest Tech Fund Worth to SoftBank?". Wall Street Journal. ISSN 0099-9660. Retrieved 2021-06-24.
  2. ^ a b c d e "SoftBank announces AI-focused second $108 billion Vision Fund with LPs including Microsoft, Apple and Foxconn". TechCrunch. 26 July 2019. Retrieved 2021-06-24.
  3. ^ a b c "SoftBank's Vision Fund 2: more firepower, bigger questions". Nikkei Asia. Retrieved 2021-06-24.
  4. ^ a b c "Softbank just shocked its critics by landing the biggest profit in the history of a Japanese company". CNBC. 2021-05-12. Retrieved 2021-06-24.
  5. ^ a b c Savitz, Eric J. "SoftBank Boosts Size of Vision Fund 2 to $30 Billion". www.barrons.com. Retrieved 2021-06-24.
  6. ^ a b c Alkhalisi, Zahraa (6 October 2017). "Where the huge SoftBank-Saudi tech fund is investing". Cnn.com. Retrieved 4 November 2018.
  7. ^ a b c Merced, Michael J. de la (2016-10-14). "SoftBank and Saudi Arabia Partner to Form Giant Investment Fund". The New York Times. ISSN 0362-4331. Retrieved 2021-06-24.
  8. ^ Benner, Katie (10 October 2017). "Masayoshi Son's Grand Plan for SoftBank's $100 Billion Vision Fund". The New York Times. Retrieved 9 November 2018.
  9. ^ Goel, Vindu; Singh, Karan Deep; Griffith, Erin (13 January 2020). "Oyo Scales Back as SoftBank-Funded Companies Retreat". The New York Times.
  10. ^ Merced, Michael J. de la (6 February 2020). "Elliott Management Is Said to Push for Change at SoftBank". The New York Times.
  11. ^ a b Hope, Rolfe Winkler, Liz Hoffman and Bradley (2020-02-07). "WSJ News Exclusive | New SoftBank Tech Fund Falls Far Short of $108 Billion Fundraising Goal". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-02-10.{{cite news}}: CS1 maint: multiple names: authors list (link)
  12. ^ Brown, Maureen Farrell and Eliot (2019-10-23). "SoftBank to Boost Stake in WeWork in Deal That Cuts Most Ties With Neumann". Wall Street Journal. ISSN 0099-9660. Retrieved 2021-06-24.
  13. ^ Nussey, Sam (2020-05-18). "SoftBank's Vision Fund tumbles to $18 billion loss in 'valley of coronavirus'". Reuters. Retrieved 2021-06-24.
  14. ^ Massoudi, Arash (10 June 2020). "SoftBank cuts 15% of jobs from Vision Fund arm". www.ft.com. Retrieved 2021-06-24.{{cite web}}: CS1 maint: url-status (link)
  15. ^ a b Lynn, Alex (2021-05-12). "SoftBank bets $30bn of its own capital on Vision Fund II". Private Equity International. Retrieved 2021-06-24.
  16. ^ a b "SoftBank goes it alone on Vision Fund 2 as portfolio profits leap | PitchBook". pitchbook.com. Retrieved 2021-06-24.
  17. ^ GmbH, finanzen net. "Softbank's Vision Fund could go public in a $300 million SPAC deal, report says". markets.businessinsider.com. Retrieved 2021-09-02.
  18. ^ Kharpal, Arjun. "SoftBank Vision Fund posts record $27 billion loss as tech stocks plummet". CNBC. Retrieved 2022-11-11.
  19. ^ a b c Kharpal, Arjun. "Top SoftBank exec steps back from role at Vision Fund as pressure mounts on investments". CNBC. Retrieved 2022-08-01.
  20. ^ "SoftBank Talent Drain Worsens, Adding Pressure on Son to Deliver". Bloomberg.com. 2022-08-04. Retrieved 2022-08-08.
  21. ^ Nussey, Sam (2022-08-08). "SoftBank plans Vision Fund job cuts after record net loss". Reuters. Retrieved 2022-08-08.
  22. ^ Savitz, Eric J. "The SoftBank Experiment Has Failed. Here's What Comes Next". www.barrons.com. Retrieved 2022-11-11.
  23. ^ "SoftBank CEO 'ashamed' of pride in past profits as record losses prompt cost cuts". the Guardian. 2022-08-08. Retrieved 2022-11-11.
  24. ^ "SoftBank suffers as Son's bets on China tech backfire". Nikkei Asia. Retrieved 2022-11-11.
  25. ^ Brown, Eliot (2022-08-02). "SoftBank Emerges as a Big Loser of the Tech Downturn. Again". Wall Street Journal. ISSN 0099-9660.
  26. ^ "SoftBank's Epic Losses Reveal Masayoshi Son's Broken Business Model". Bloomberg.com. Retrieved 2022-11-11.
  27. ^ Williams, Oscar (2022-08-11). "The dangerous approach of SoftBank's Masayoshi Son". New Statesman. Retrieved 2022-09-02.
  28. ^ "Some suggested slides for SoftBank". Financial Times. 2022-11-10. Retrieved 2022-11-11.
  29. ^ a b "SoftBank Investment Advisers Investor Profile: Portfolio & Exits | PitchBook". pitchbook.com. Retrieved 2021-06-24.
  30. ^ "SOFTBANK IS TAKING OVER TECH". AngelList. October 11, 2018.{{cite web}}: CS1 maint: url-status (link)
  31. ^ Dolan, Kerry A. "Japanese Billionaire Masayoshi Son, Larry Ellison, Apple, Saudi Arabia All Bet On Vision Fund". Forbes. Retrieved 2021-06-24.
  32. ^ John Koetsier (2021-07-27). "Softbank Leads $200M Investment Into Printable Battery-Free IoT Startup Wiliot". Forbes. Retrieved 2022-07-08.
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