There is a flurry of stories out of SoftBank this morning, which introduced its Fiscal Year 2019 (ending March 31, 2020) monetary outcomes in a single day. It’s been a nasty yr for the Vision Fund, with enormous losses at WeWork and Uber on account of company incompetence, intrigue, and naturally, COVID-19.
But buried a bit within the footnotes of its monetary statements is a notice that the primary Vision Fund formally closed its doorways to new investments method again in September 2019 — having exhausted all of its investible capital.
Per the notes, on September 12, 2019, the managing entity that owns the primary Vision Fund decided that the fund had spent 85% of its capital, with the rest reserved for follow-on investments and masking necessary disbursements and fund administration charges. That triggered the early ending of the fund, which was in any other case contractually allowed to take a position till November 20, 2022.
To put that in perspective: the Vision Fund, which introduced its first shut on May 20, 2017, raised a complete of $98.6 billion in accordance with SoftBank’s paperwork.
Which signifies that the fund spent $83.eight billion on investments and costs in nearly 845 days.
That’s simply shy of $100m per day.
The firm final yr unveiled its plans to launch a second, even bigger Vision Fund totaling $108 billion — however fundraising has been sluggish in accordance with reviews, and that’s not prone to change given a few of the different prime line numbers SoftBank unveiled as we speak about its Vision.
SoftBank pronounces AI-focused second $108 billion Vision Fund with LPs together with Microsoft, Apple and Foxconn
The Vision Fund formally misplaced $17.four billion in worth in accordance with SoftBank’s financials for the yr ending this previous March 31. The yr earlier than, SoftBank had registered a constructive acquire within the Vision Fund’s worth of $12.eight billion, which signifies that the injury of this yr’s efficiency has utterly worn out all beneficial properties the fund had made within the earlier yr.
But the actual shock is the efficiency of the fund’s underlying portfolio firms. The Vision Fund at present has 88 energetic portfolio firms that haven’t exited. Of these, 19 investments noticed a acquire in mixed worth of $3.four billion in accordance with SoftBank, whereas 50 firms noticed a decline in worth aggregating to $20.7 billion in losses. 19 portfolio firms had been left unchanged in worth.
It’s not unusual for early-stage funds to see enormous loss ratios of this kind, however it’s terribly uncommon inside the context of a late-stage fund. Considering that these valuations had been nearly definitely assessed earlier than COVID-19 totally unleashed its injury on the worldwide financial system, having 57% of portfolio firms drop in worth in only one yr is insane, notably given that almost all of them had been headed towards some type of exit within the short-to-medium time period given their stage.
That’s to not say that there aren’t shiny lights within the portfolio, or some realized wins. But in the end, a portfolio is barely nearly as good as its elements, and proper now, these elements don’t look all that good.