Masayoshi Son, founder of Softbank Group Corp, has dreamt for building a global tech empire but that dream has now been unraveling as his $100 billion Vision Fund is getting a harder hit by coronavirus pandemic. The virus crisis not only increasing the losses at Vision Fund but has also been distressing many of the Fund’s bets indicating more economic crisis for the Fund to come.
The fund has invested more than half of its capital in startups, most of which are now suffering from the impact of coronavirus or were already in pressure before outbreak of the virus. Fund’s main transport investments are now been suffering from a drop in ride-hailing usage which causes it to decline more than 50% as majority of the people are home stuck under pandemic guidelines. Moreover, six of the startups with SoftBank as a main investor were previously intending going public this year, but have delayed their plans to next year.
The Japanese conglomerate has already been recognizing a loss of 1.8 trillion yen ($17 billion) for year to March period. The blindly betting on WeWork by Son, also dramatically imploded during that loss making process which raise concerns of the Middle Eastern investors who have poured much of the money in the fund.
The portfolio firms were going through challenging phases even before the pandemic but its economic impact has proved the stance of critics right who have been calling the strategy of investing large chunk of money risky. Especially in the businesses which still have to prove their selves profitable and investments firms backing them only because of their expectations that these businesses would likely to b dominating big new markets.
Over the last three years, Son came transforming SoftBank not only into a tech investor betting more on tech startups but also raising the world’s biggest investment fund of Vision Fund.