The Vision Fund lost $17.7B for the year, pushing the returns YoY into the negative territory. Softbank Group [which manages The Vision Fund] lost $13B in total, and all is not well for Masayoshi Son.
Reason #1 - The WeWork Failure
Softbank’s bet on WeWork didn’t work out. Not only did the IPO never materialized, but because of it, WeWork witnessed a 90% drop in valuation.
Softbank had to write off it’s investment in WeWork. And, honestly Masayoshi Son could’ve called it a day. The investment didn’t work out. It was probably not a viable business model, and definitely not a ‘tech’ company. In its essence, WeWork was a real estate company requiring lots of capital to expand.
The only problem was, Softbank poured another $9.5B to keep it alive - only to find itself in a position where they would have to write this additional investment off too!
Reason #2 - Uber’s muted IPO
A lot was riding on the success of Uber’s IPO. The Vision Fund was looking to offload their shares at a sizeable profit - but Uber [unfortunately] couldn’t live up to the hype. At the time of recording this episode, the stock was trading well below it’s IPO price.
Vision Fund’s Portfolio
The Vision Fund has a portfolio of 88 companies. Now here’s an interesting statistic that I came across. The Fund expects that out of it’s portfolio of companies, 15 companies will go bankrupt, 15 will perform well and the rest will just survive without generating any significant gain.
The reason why Softbank and the Vision Fund in particular gets premium coverage, is because of one person - Masayoshi Son.
Son, is a visionary who doesn’t shy away from making bold moves and throwing money at something he believes could disrupt the world. And that’s why he set up a $100B Fund, so that he could spearhead startups in the field of AI, Robotics and Automation.
At the very core, the Fund is betting on the concept of Singularity.
Singularity is a moment in time, when AI will become smarter than the human brain.
Son believes, that the human race will achieve Singularity by 2050. And, after watching Black Mirror - I am not too excited about it!
The Last Vision Fund?
Softbank had launched a second version of the ‘Vision Fund’ with a target to raise $108B. However, taking a good look at the performance of the first Vision Fund, it seems highly unlikely the investors would be willing to hand over their money to Son. Unless something drastic happens in the next few months.
If I were a mathematician, I would say - “in all probability, the first Vision Fund is going to be it’s last”.