Monday Mar 27, 2023

Losses Piling Up for Softbank’s Vision Fund 2

Losses Piling Up for Softbank’s Vision Fund 2

The CEO of Softbank Masayoshi Son is well known figure in start-up investing. SoftBank’s first vison fund poured billions of dollars in tech companies. However, some of Son’s bets turned out to be massive failures that cost investors a lot of money. For SoftBank’s vision fund 2 Son said that he would be more restrained when investing.

In 2017, he launched $100 billion dollar vision fund 1. It was the world’s largest private investment fund and it aggressively invested in start-ups. It became known for writing big cheques. Sometimes even larger than founders had even asked for, but number of companies it backed flopped costing investors billions. When the time for vision fund 2 came, SoftBank had to go alone with only its own money as well as a new strategy. As losses have been mounting for vision fund 2 and it is now clear that some mistakes from vision fund 1 were repeated.

Vision fund 1 was a giant pile of cash which was wasted in failed companies like WeWork. Vision fund 2 on the other hand, Son said that he had learnt from the mistakes from before and he was going to invest in companies with profits. However, fund 2 did try to be frugal in investing initially then the pandemic hit. Then what happened around end of 2020, the stock market was on a high. Because of this SoftBank’s investments in companies like DoorDash doubled overnight exceeding many market analyst predictions.

From 2021 SoftBank again started heavily investing in start-ups once again $38 billion from vision fund 2.  Since then SoftBank has been taking huge losses. Companies in these times of high inflation used more money than they hoped and this caused Softbank losses in billions of dollars. Expectations from vision fund 2 are to brace for more losses in short term and long term. So the future doesn’t look too bright for SoftBank as of now.

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