SoftBank Group, which is behind the highly successful Vision Fund, is not going to meet its financing goal for its follow-up fund, Vision Fund 2, which is seen as a sort-of sequel to the original fund, according to a report by The Wall Street Journal.
Investors are spooked by the failure of investments in WeWork and other tech companies like Uber that haven’t lived up to expectations, and they’re not willing to pony up new capital.
Last summer, the fund was trumpeted as a successor to the $100 billion Vision Fund, and it at one point held $108 billion. However, the new fund might end up being cut in half, and most of its capital is from SoftBank itself. If SoftBank doesn’t reach its goal, there could be consequences in the tech sector.
DoorDash and Uber both got huge boosts from the fund’s spending, which lasted two years and equaled about $90 billion.
Without money, the fund could get rid of staff, which currently holds at 500. Some people have already left, and others are moving to Abu Dhabi. There’s been talk of one-off deals with certain investors, allowing them to have more control over where the money goes. A hedge fund has also been created.
A shift in the philosophy of the fund means that there has been tension between SoftBank CEO Masayoshi Son and Vision Fund head Rajeev Misra. Son wants the second fund to be completely fundraised, and Misra has been running the hedge fund and is more open to the one-off deals.
The Vision Fund got huge investments from Saudi Arabia and Abu Dhabi, and with its $100 billion chest, it was the biggest game in town when it came to investing in nascent tech companies.
Akshay Naheta, a managing partner, and Penny Bodle, head of investor relations in Europe, are two of the executives who have moved to Abu Dhabi from the fund’s London base. The moves were reportedly to help gain the favor of the emirate, whose involvement in the second fund could spur others.
