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Softbank's plan for second mega investment fund is hit by …

by ace
Softbank's plan for second mega investment fund is hit by ...

The value of other major investments, according to two people familiar with the situation, who spoke to Reuters, would also have impacted SoftBank's revenue capacity.

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Son is still determined to move forward with the "Vision Fund 2" name that leads to the global attempt to invest in fledgling technology companies. But, according to sources, the fund is likely to be much smaller – at least initially – than the $ 108 billion that SoftBank said it had aligned when it announced the fund in July.

Major investors have not yet embarked on the project, leaving a $ 38 billion pledge from SoftBank itself as the only major investment, according to sources.

And the sheer size of this investment may be being questioned because of some of the recent setbacks Softbank has suffered and the lack of cash available on its balance sheet, according to a Reuters analysis.

Vision Fund and SoftBank declined to comment on Vision Fund 2.

WeWork's implosion in value and questions about its business model have damaged Son's reputation as a seasoned investor and point to a large reduction in value over the first Vision Fund.

SoftBank and Vision Fund together invested more than $ 10 billion in the shared office company, leaving WeWork a $ 47 billion valuation in January this year. WeWork recently abandoned plans for a public offering that would have valued the company between $ 10 billion and $ 12 billion.

If the second fund falls far short of Son's goal, or is discarded, it will have far-reaching implications for Silicon Valley investors and Wall Street entrepreneurs.

Changes in the investment world

The first $ 97 billion Vision Fund has transformed the world of technology investments with huge bets on fast-growing but unproven companies.

It was higher than the value added collected by the entire US venture capital industry in 2018, giving Son a huge influence on the startup market.

Skeptics say the troubles at WeWork and the poor performance in the money-losing companies market, such as Uber and Slack, will cause a huge drop in the value of numerous startups called unicorns worth more than $ 1 billion.

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"Radiation is spreading everywhere," said Scott Galloway, an author and entrepreneur who teaches at New York University and who has been closely following WeWork's turmoil.

Of course, there are investments in the more than 80 companies the Vision Fund has funded that seem to be paying off quickly.

Delivery company DoorDash, for example, skyrocketed, at least on paper, from $ 1.4 billion last March to 12.6 billion in May. SoftBank, which owns about one-third of Vision Fund, reported in July a 62 percent return on its investment, including management fees and performance.

Son also has a track record of big returns: the $ 20 million he invested in Alibaba China in 2000 is now worth over $ 100 billion, for example.

Most analysts still call SoftBank "buy" and say the conglomerate still has the ability to borrow, and its majority-owned telecommunications and internet unit generates healthy profits.



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