The bubble that Masayoshi Son blamed for SoftBank's $23B loss last quarter is one that he helped create through Vision Fund, which distorted the VC market
In retrospect there were reasons to be skeptical of the Vision Fund, the attempt by the Japanese tech conglomerate SoftBank Group Corp … Tweets: @noahpinion Tweets: Noah Smith / @noahpinion : Step 1: Get the Saudis to give you a ton of money to invest Step 2: Pump up tech valuations to wild levels Step 3: Tech valuations fall Step 4: ...profit? https://www.bloomberg.com/...
Context & Ripple Effects
The $23B quarterly loss closes an arc that related coverage has tracked for years. In 2018, the Vision Fund looked unstoppable — sources described a $100B fund with a 60% ROI in its first year, built on Son's habit of investing fast and detached from his own investor committee (governance reporting at the time flagged exactly that).
The mechanism behind today's reckoning was documented back in 2019: SoftBank's practice of participating in multiple rounds to pump up startup valuations, exposed most famously around WeWork (the multi-round valuation-pumping process). Portfolio companies like Wag, Fair, and Oyo were already struggling then, with Oyo's founder reportedly propped up by a $2B loan backed by Son himself (the struggling Vision Fund portfolio). The loss is the bill arriving.
First-order effects
- SoftBank and its Vision Fund LPs — including the Saudi backers Noah Smith's viral tweet skewers — absorb the mark-to-market hit as the inflated valuations the fund itself set now reprice against it.
- Masayoshi Son's credibility as a price-setter takes the direct damage: the same man who once reported a 60% first-year ROI is now blaming a bubble his own fund inflated.
Second-order effects
- Startups that priced their raises off Vision Fund-led rounds lose their reference point — with the fund retrenching, later-stage founders face down-rounds or flat extensions rather than the pumped multiples of 2019.
- Rival late-stage investors who competed against SoftBank's checkbook regain pricing leverage, but inherit a portfolio of companies whose unit economics were sized to bubble-era capital.
Third-order effects
- If the pattern holds, venture capital's experiment with single-megafund price distortion gets structurally unwound: limited partners demand governance checks on founder-autocratic allocators, reversing the detached-committee model Son ran since 2018.
- The episode becomes the template case for how concentrated capital can manufacture — then be destroyed by — its own valuation cycle, shaping how LPs size future mega-funds.
The trend: Concentrated mega-fund capital is cycling from valuation inflation to forced deflation, with the Vision Fund as the defining case of a price-setter undone by its own prices.