Sources: after its funds performed poorly, SoftBank considers launching a third Vision Fund; Vision Fund 2 is now worth 19% less than the $49B invested
Despite massive losses, Japanese billionaire Masayoshi Son has tried to chart a new path for the tech investment giant
Context & Ripple Effects
The Vision Fund franchise has been shrinking toward SoftBank itself for years: the firm struggled to raise Vision Fund 2 from outside investors, and reporting at the time said it might end up less than half of the planned $108B with nearly all capital coming from SoftBank's own balance sheet (Vision Fund 2 falling well short of its $108B target).
The performance record since has been brutal — a fourth straight quarterly loss in early 2023 (~$5B Q3 Vision Fund loss) compounded into a ~$32B full-year loss, while filings show the US portfolio has since shrunk by almost $29B as Masayoshi Son pivots toward AI and chips (the US portfolio's ~$29B contraction). A third fund floated from this position is a bet that Son can raise again into that track record.
First-order effects
- External limited partners are being asked to commit fresh capital to a vehicle whose predecessor, Vision Fund 2, is worth 19% less than the $49B invested — the same LP base that already balked during the original fundraising.
Second-order effects
- If outside money stays reluctant, the third fund likely repeats Vision Fund 2's structure — SoftBank's own balance sheet carrying most of the risk — deepening the concentration of Son's personal conviction bets rather than diversifying them.
- A new fund aimed partly at AI would put SoftBank in direct competition for deals with the same late-stage investors it outbid during the last cycle, but now writing smaller checks, as its investment pace already fell to ~$3B for the year to March.
Third-order effects
- The pattern points toward SoftBank abandoning the third-party mega-fund model altogether: successive funds funded increasingly by the company itself turn what was pitched as an asset-management business into a leveraged proprietary investor, with Son's AI and chip ambitions replacing diversified tech stakes as the core thesis.
The trend: SoftBank is converting the Vision Funds from externally raised mega-funds into balance-sheet vehicles for Masayoshi Son's concentrated AI bets, with each new fund more dependent on SoftBank's own capital than the last.