SoftBank Group Corp. founder Masayoshi Son is considering a new type of fund for startup investing. The decision came after continuous cutting down of deals after missteps with WeWork and several other companies.
Masayoshi Son unveiled his $100 billion Vision Fund three years ago and had been planning on raising a similarly sized second Vision Fund. However, raising money from limited partners for the second fund has been difficult and he may instead make startup investments solely with SoftBank’s capital for a year or two.
Commenting on the decision Son said, “A lot of our planned investors have been worried by the trouble at WeWork and Uber and we heard their feedback. So before we officially launch SoftBank Vision Fund 2, maybe we start from a smaller scale and start from a shorter period in terms of investment as sort of a bridge.”
So I’m beginning to think about that kind of two-step approach.We have not made any official decision yet, but that’s one of the options that we started considering. Again, we have not come to a conclusion yet.” ,he added.
The Vision Fund lost 225.1 billion yen ($2.05 billion) for the three months ended in December, after losing 970.3 billion yen the quarter before including WeWork and Uber Technologies Inc.
The original Vision Fund was set up by Soft Bank via money from outside investors, led by Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Co. But for years before that, SoftBank made deals with its own capital, including early investments in Alibaba Group Holding Ltd. and Yahoo! Corp.
Indeed, before the first Vision Fund, SoftBank set up an entity called Delta Fund that was used for startup deals, including some that eventually were moved into the Vision Fund. SoftBank had weighed contributing $40 billion to $50 billion of its own capital for the second fund.
“We can make investment on our own or we can work with partners, new or existing. We made several investments because we do have a very good pipeline. It’s a hundreds of billions yen level“We shouldn’t be postponed too long,” he said. “First, make it a little bit smaller for 1 to 2 years, raise some bridge money, while were are building a track record. Then once we have results, I want to raise an official second fund.” said Son.