The most famous tech investment fund registers immense losses
Softbank has just unveiled very poor quarterly results, notably weighed down by its Vision Found investment fund, awarded to new tech companies.
The tumble is violent. In equity markets, especially in tech, falling prices have wiped out the performance of many companies during the pandemic. And behind these companies (on the stock market or not, for that matter), investment funds in a very bad position.
This is the case of the largest Japanese conglomerate, Softbank. The one to whom the famous French number 2 Michel Combes left the adventure at least in June, sees his losses increase from billion to billion. Its last quarter result is in the red, with $23.1 billion wiped out from April to June. Vision Found alone lost $17.1 billion.
“Market volatility driven by rising interest rates and political instability having hit the tech investor”, wrote the Reuters agency, forcing Soft Bank to record heavy losses. These concern above all “Vision Found”, the envelope released by the conglomerate and specialized in the technological field. Announced in 2016 and launched the following year, the investment fund was the largest ever, with $100 billion in capital to invest.
Softbank has had a new fund since 2019, called Vision Found 2, with which it has already invested in 269 companies. But again, its valuation fell from $48.2 billion to just $37.2 billion at the end of June.
Total amount of capital invested by Softbank in tech was $154 billion dollars (figures as of March 31, 2021). In this capital, several other companies had joined the Japanese to take advantage of his expertise and invest in real nuggets. We think in particular of Apple.
To hope to reverse the trend and learn from its mistakes, Softbank has given its course of action. Via its boss Masayoshi Son, who spoke at a briefing this Monday at the end of the day in Tokyo, the objective will be to “tighten the investment criteria and preserve liquidity to face the recession ”.
Stricter criteria on eyed companies, a challenge as the market does not currently offer the possibility of going public without too many problems, even for the biggest nuggets .
Several issues in which Softbank had invested are still to be settled as well. This is the case of Arm, the company which was to be acquired by Nvidia after the cancellation of the procedure (which was to amount to 40 billion dollars). The Japanese conglomerate hopes to be able to motivate the company in which it has invested to go public so that it can generate profits. Procedure that Softbank has already made with Uber and Opendoor Technologies, for a total gain of 5.6 billion dollars.