Sources: SoftBank's Vision Fund 2 may end up raising less than half of the planned $108B, with nearly all of its capital coming from SoftBank itself
The new pool could end up being less than half its planned size, with nearly all of its capital coming from SoftBank itself
Wall Street Journal
Context & Ripple Effects
Vision Fund 2 was announced in July 2019 as a $108B vehicle anchored by a $38B SoftBank commitment, with Apple, Microsoft, and other corporates expected to contribute. The raise unraveled almost immediately: some of the world's largest investors gave a lukewarm response, by October SoftBank was reported struggling to raise money, and the first close landed at just $2B so deal-making could start.
This report closes that loop: the fund may finish at less than half its target with nearly all capital from SoftBank itself. That converts what was pitched as an LP coalition into an extension of Masayoshi Son's balance sheet — consequential because the fund later deployed aggressively, putting about $13B into over 50 companies in Q2 2021 alone.
First-order effects
The external LPs named at launch — Apple, Microsoft, and other prospective contributors — are effectively absent, leaving Vision Fund 2's check-writing capacity tied to SoftBank's own finances rather than committed third-party capital.
Startups counting on Vision Fund 2 term sheets face a materially smaller pool than the advertised $108B, with deployment sized to whatever SoftBank commits internally.
Second-order effects
Concentrating the fund on its own capital deepens SoftBank's public-market problem: shares already trade at roughly a 50% discount to net asset value, and absorbing the fund's full risk gives investors more reason to apply it.
Institutional investors who balked in 2019 gain pricing leverage over any successor vehicle — a dynamic visible when SoftBank weighed launching a third Vision Fund after Vision Fund 2 fell 19% below its $49B invested.
Third-order effects
If the pattern holds, the Vision Fund structure inverts from an externally raised megafund into a captive SoftBank vehicle that recycles the founder's own capital through successive funds regardless of performance — a cycle the coverage traces from the $2B first close through the 2022 drawdown and third-fund deliberations.
The trend: Mega-VC funds are drifting from externally raised capital toward sponsor-balance-sheet vehicles, with SoftBank's funds the clearest case of the model shrinking to what its founder will personally underwrite.
Tech investing 101: 1) Raise $100B (mostly debt; requires u to pay 7% interest/yr) 2) Hire 100 ppl. Set them against each other like Wall Street traders 3) 1 decision-maker 4) Adjust diligence to say deals will return 30%+/yr 5) Some partners dont have carry in fund 6) Win
Both of these ways to make a decision are equally wrong: “Billion-dollar investment decisions were made in minutes rather than by committees after months of research” https://www.wsj.com/...
“Mubadala head Khaldoon Al Mubarak told Mr. Son at a recent meeting that the Vision Fund's first batch of investments need more time to develop and Mubadala wants to continue evaluating the technology landscape before it commits to the next fund” https://twitter.com/...
3/ Also worth remembering that Vision Fund 1 isn't structured like a normal private equity fund. A lot of it consists of preferred securities that come w/ a coupon. https://www.axios.com/...
There was a Bloomberg report last fall that it had secured $2 billion in outside commitments but, as of a couple weeks ago, it hadn't even closed on that. All Vision Fund 2 investments so far have come from SB's balance sheet.
It's been known since last summer that SoftBank was having trouble raising Vision Fund 2, and that the $108 billion figure was aspirational. Dunno why it's turning into headlines again today. Only change is that Elliott will pressure SB to cut its own commitment.
Lots of scoopy nuggets in here on the ever-changing, ever-fascinating SoftBank story *going bigger into public stocks *LPs want one-off deals (fee free) *borrowed against Alibaba shares to free up cash & now trying to raise ~$5bn on Arm stake https://www.wsj.com/...
Elliott Management has quietly built up a more than $2.5 billion stake in SoftBank & is pushing for changes at the company, including better management of investment decisions at its $100 billion Vision Fund: sources https://www.wsj.com/...