Briefing

SoftBank’s Vision Fund moves away from high-risk investment strategy following WeWork bailout

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CEO Masayoshi Son is redirecting his team to focus on improved corporate governance and profitability in portfolio companies as the world’s largest tech investment fund gears up for its second round. (Wall Street Journal)

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Talking point: This is a fundamental shift for SoftBank, whose operating mandate so far has been pushing portfolio companies to grow and increase their market share with minimal attention to losses. That strategy has largely not panned out. Some of its largest investments—namely Uber and the embattled WeWork, which the fund bailed out with US$9.5 billion this week—have floundered. Meanwhile, the conglomerate is trying to raise investor confidence in the artificial-intelligence focused Vision Fund 2, for which it claims it’s raised US$108 billion. However, a Wall Street Journal investigation has cast doubt on that figure’s accuracy. The fund’s new direction appears to be making waves in SoftBank’s portfolio companies already—Fair, a car-subscription startup, laid off 40 per cent of its staff to cut costs today, though Fair denies the move was motivated by pressure from the tech fund. And two prominent Wall Street analysts have now downgraded their rating of SoftBank from “buy” to “hold.”