SoftBank Wants To Launch a Third Vision Fund, To Recoup Ballooning Losses Of The Previous Ones

Global tech investor Softbank Group Corp SFTBY explored the launch of a new giant startup investment fund after the poor performance of its two earlier funds, the Wall Street Journal reports.

The leading startup investor will likely use its cash for the third SoftBank Vision Fund. SoftBank had also weighed putting additional money into Vision Fund 2, its primary investment fund for the past few years. 

Vision Fund 2's losses significantly reduce the pay for SoftBank staff working on the fund leading to the move. Some employees of the Vision Fund pushed for the new fund. 

The new fund would help them reset their compensation, which partly depends on the fund's profits and investments. However, the current fund would require making back significant losses before employees could get those bonuses. 

SoftBank also explored restructuring staff incentives for Vision Fund 2. Despite the misses, SoftBank expects more cash over the next year from a public listing of its chip maker Arm. Its Japanese telecom holdings also generate money.

Earlier, SoftBank shared plans to slash at least 20% of employees at its loss-churning Vision Fund operation.

CEO Masayoshi Son helmed SoftBank's Vision Funds suffered a record $23 billion loss June quarter thanks to the plunging valuations of portfolio companies, including Coupang, Inc CPNG and DoorDash, Inc DASH.

Rajeev Misra, who helped Son set up the initial Vision Fund with almost $100 billion in 2017, quit.

SoftBank raised over $17 billion by selling forward contracts on Alibaba Group Holding Ltd BABA. Analysts raised possibilities of SoftBank going private, citing quarterly loss, pledge of heavy cost-cutting, and self-criticism.

Price Action: SFTBY shares traded lower by 1.22% at $18.61 on the last check Wednesday.