SoftBank Vision Fund, the world’s largest tech-focused investment fund created by SoftBank founder and CEO Masayoshi Son, lost a record $32 billion in the fiscal year ending in March, the company said today (May 11) in its annual and quarterly report. The results came even as SoftBank scaled back on risky investments and entered a “defense mode” in the past year.
SoftBank is a Japanese telecom and internet conglomerate. Its business includes a nationwide telecommunications network in Japan, Yahoo! Japan, and the social media app Line, among others. Vision Fund is a venture capital unit focusing on investing in tech startups with high growth potential. To date, SoftBank has launched two funds—Vision Fund 1 in 2017 and Vision Fund 2 in 2019—investing a total of $200 billion in tech companies globally. Its most notable bets include Uber, WeWork, Slack and Alibaba, among others.
Vision Fund’s upstream investors include Saudi Arabia’s sovereign wealth fund Public Investment Fund (PIF), Abu Dhabi’s Mubadala Investment Company, and SoftBank itself.
Where did SoftBank Vision Fund lose money?
Most of Vision Fund’s portfolio companies are unprofitable, and the fund’s performance relies heavily on the macroeconomic climate and startup valuation trends. As rising interest rates in the past year drained startup funding and tumbled valuation, loss from the Vision Fund unit in fiscal 2022 widened 70 percent from a year ago, today’s earnings report shows.
In the most recent quarter ended March, the market value of Vision Fund’s investment portfolio was marked down by $2.3 billion to $138 billion, “mainly reflecting markdowns of weaker-performing companies and share price declines among market comparable companies,” SoftBank said in today’s earnings report.
In the past fiscal year, Vision Fund 1 recorded an unrealized loss of $1.6 billion from its stake in Chinese artificial intelligence firm SenseTime. It lost another $1.6 billion in Indonesian ride-hailing company GoTo and nearly $800 million in food delivery giant DoorDash.
SoftBank entering “defense” mode amid an “unstable” year
During a press conference in Japan today, SoftBank’s chief financial officer Yoshimitsu Goto said it has been an “unstable” year marked by geopolitical risks and financial system issues, citing the collapse of Silicon Valley Bank and the sale of Credit Suisse to UBS.
On a positive note, Goto said SoftBank has a number of companies ready to go public, valued at a combined $37 billion. He did not name those companies. Goto also noted SoftBank is making “dramatic progress” in artificial intelligence, suggesting Vision Fund might soon invest in the buzzing sector.
Last year, after suffering $19 billion in losses, SoftBank Vision Fund dumped its shares in Chinese tech giant Alibaba, Uber and online real estate marketplace Opendoor in order to “strengthen our defense against the severe market environment,” the company said in a regulatory filing in August 2022.
Today’s earnings report offered no update on whether SoftBank will launch a third Vision Fund. The company has said it will consider raising Vision Fund 3 after it has deployed all the capital in Vision Fund 2.