SoftBank Vision Fund’s sequel may start smaller than expected, Masayoshi Son says

After Vision Fund saw major losses in the last two quarters, SoftBank founder and CEO Masayoshi Son said the company plans to scale back its plans for its second mega fund.

Masayoshi Son / Photo credit: SoftBank

In the earnings presentation on Wednesday, Son said that due to a series of incidents at WeWork and Uber, some investors have become more careful about backing Vision Fund 2. “At the moment, I think that our next fund size should be a little bit smaller because we have caused concerns and anxiety to a lot of people,” he said.

In July 2019, SoftBank announced its plans to establish the second Vision Fund to accelerate AI development. The expected size of the fund at the time stood at US$108 billion after gaining pledges from the likes of Apple, Foxconn, Microsoft, and investors from the Middle East.

Son said the company doesn’t need to pursue that size at the moment. It will instead prioritize showing some performance with small-scale investments first, then find an opportunity or a challenge to tackle.

SoftBank now looks to continue with its investment strategy using its own money. The company previously said that it plans to pour US$38 billion itself into the fund.

The Japanese conglomerate may also do a bridge fund prior to the official launch of Vision Fund 2 to make sure stakeholders feel more comfortable, Son said. The company, however, has not made any official decisions on the matter yet.

Late last year, SoftBank completed the initial close for Vision Fund 2 at just US$2 billion, as investors were shaken up by WeWork’s unsuccessful attempt at an initial public offering. It was also reported that Son received suggestions to delay the launch of the fund.

However, Son noted in the presentation that the launch of the new fund should not be postponed for too long, adding that the company was in advanced discussions with concerned parties.

SoftBank posted an operating loss of 225.1 billion yen (US$2.1 billion) from its US$100 billion Vision Fund for the three months ended December 2019. This pulled down the company’s overall operating profits to 2.6 billion yen (US$24 million), a 99.4% decrease from the 438.3 billion yen (US$4 billion) it reported in the same quarter last year.