After the dismal performance of its previous funds, SoftBank is reportedly considering launching a new massive investment fund.
According to a WSJ story, the Japanese technology firm will likely employ its own funds for the third SoftBank Vision Fund. In lieu of launching a third fund, the corporation is also considering putting additional money into Vision Vehicle 2, its primary investment fund.
Bloomberg reported earlier this month that SoftBank may reduce the number of personnel at its Vision Fund by at least 20 percent as a result of the Vision Fund’s contribution to the company’s $23 billion quarterly loss.
According to persons familiar with the issue who requested anonymity because the subject is secret, the 65-year-old billionaire is considering contributing to another startup fund as one of several potential uses for the assets.
Series of catastrophic mistakes
The amount of funds that Son would like to put in a third fund is not yet clear based on what they have said. The first Vision Fund was partially sponsored by international investors, such as Saudi Arabia’s Public Investment Fund, but the second Vision Fund has approximately $40 billion and was wholly funded by SoftBank.
Son added that he wanted to collect donations of a comparable magnitude every two to three years, following the introduction of the Vision Fund’s initial proposals. After that, however, he committed a series of catastrophic mistakes, including investing in WeWork Inc., Wirecard AG, and Greensill Capital. SoftBank was obliged to write down the value of its portfolio due to the steep decrease in the value of technology stocks this year, resulting in more than $40 billion in losses over the previous two quarters.
Unusual business strategies
Son, a self-made millionaire who founded his company forty years ago, derives enormous joy from his unusual business strategies. He founded the first Vision Fund in part because he believed that typical venture capital firms were too stodgy and unimaginative. It’s probable that he perceives the present moment, with stock prices decreasing and investors getting more anxious, as the ideal time to begin planning for large wagers.
Since the end of June, when it had more than $50 billion in cash and equivalents on its balance sheet, SoftBank has reportedly boosted its cash and equivalents to over $60 billion. This gain resulted from the sale of a portion of the company’s shareholding in Alibaba Group Holding Ltd. It is uncertain what new financial prospects Son is now considering, but he has allegedly discussed taking SoftBank private on several occasions.
