SoftBank's Vision Fund Pulls Away from Potential Startups after the WeWork Public Spiral, Says Report

By StartUp City | Thursday, February 13, 2020

SoftBank backed out from investing in three start-ups after they submitted term hundreds of millions of dollars worth term sheets. Axios received the news from a familiar source that SoftBank has been delaying the final sign-off on their investments in the three startups: Honor, Seismic and Creator, before eventually dropping it completely

FREMONT, CA: Axios reported that Softbank’s Vision Fund has walked away from several startup investments after the public spiral of its portfolio company WeWork.

According to Axios, SoftBank backed out from investing in three startups after they submitted hundreds of millions of dollars worth term sheets. Axios received the news from a familiar source that SoftBank has been delaying the final sign-off on their investments in the three startups: Honor, Seismic and Creator, before dropping it completely.

A SoftBank spokesperson stated to CNBC, “Given we’re a fiduciary and investing very large amounts of capital, our investment process is more rigorous than unregulated investors and typical VCs. There have been a few cases where our process took longer than anticipated, which we regret. We’re always upfront with founders about what to expect and we try to keep them informed every step of the way.”

Stepping away from potential investments can be SoftBank’s cautious move as it strengthens its second multibillion-dollar vision fund. Sources familiar with SoftBank's terms told CNBC that Masayoshi Son intends to focus the investment strategy more on profitability and public offering than rapid growth. The new investment strategy focuses on slowing down the investment rate for Vision Fund 2. SoftBank spent $80 billion from its original $100 billion vision fund.

People said that the discussions with Saudi Arabia’s Public Investment Fund and Mubadala Investment Company are still active for equity investments and debt. There is news in the air that PIF may invest in SoftBank again after the previous Vision Fund 1 investment of $45 billion.

After SoftBank’s one of most notable investments, WeWork failed to go public even after receiving several criticism on the company’s unconventional corporate governance and financial record, the Vision Fund was called into the public reckoning. Soft Bank and the Vision Fund invested nearly $10.6 billion in WeWork. As the market has gradually started to value profits over pure growth metrics, the firm has been suffering from poor public performances by other investors such as Uber and slack.

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