SoftBank Mulling Launching Vision Fund 3 To Invest In Startups

Amid mounting losses from its current two investment funds, global tech investor SoftBank is reportedly mulling launching a new Vision Fund in the coming months.

The Tokyo-based investment giant would likely use its own cash for the third SoftBank Vision Fund if it moves ahead with the plan, the Wall Street Journal (WSJ) reported citing sources. There is no clarity yet on the size of the prospective investment fund. 

According to Bloomberg, sources privy to the development said that SoftBank CEO Masayoshi Son has raised billions of dollars in cash recently and is looking at a new fund as one of the several possible priorities for the money.

The new fund is seen by a section of employees as a way of recouping their compensation, which is partly based on profits generated by the fund. The new fund could put profits ‘much closer in reach’ which has been hit by bad choices and adverse market conditions in the last few years, according to the WSJ report.

Besides, SoftBank is also considering pumping in additional money into its Vision Fund 2, instead of starting a new fund altogether. The report cited sources as saying that SoftBank is also considering restructuring staff incentives for its second Vision Fund. 

The conglomerate reported a loss of $23.4 Bn in the April-June quarter of 2022. Later, Son struck a sombre tone and apologised for, what he called, ‘depressing’ results. 

The dismal results were largely a result of plunging valuations of its portfolio startups and increasing foreign exchange losses. 

Beginning 2017, the investment major started off with its Vision Fund 1 which raised $100 Bn, including from Saudi and Emirati wealth funds. Later, it raised the much touted $49 Bn Vision Fund 2. Since then, the investment fund has gone south on the back of wrong bets in companies such as WeWork and Didi Global which has offset the big gains made in other startups such as Klarna Holdings.

Currently, Vision Fund 2 stands 19% lower than the $49 Bn corpus raised by the tech investor. 

The tech fund has backed many big names in the Indian startup world such as Flipkart, Ola, Paytm, Policybazaar and Delhivery.

The investment fund has also been hit by the departure of many top executives, including Rajeev Misra, in the last eight months. The WSJ report also quoted analysts as saying that the conglomerate’s options are ‘more limited’ compared to the past when it was considered the go-to fund for large and other sovereign wealth funds. 

The poor quarterly show also prompted Son to announce layoffs, saying that the company was looking to cut costs owing to mounting losses. He also told SoftBank executives in March this year to ease investing in tech firms upon evaluating the sizable drop in the value of its holdings in the previous few months.

Despite raising some of the biggest rounds, SoftBank had a mere $50 Bn in cash and other equivalents at the end of June quarter.