By
Tolu Ajiboye
February 9th, 2024
The broader tech selloffs impacted the Vision Fund Q4 2022 performance over the past year since the fund has stakes in several tech companies.
The SoftBank Vision Fund has posted its Q4 2022 earnings report, revealing a fourth consecutive quarterly loss. The Japanese banking giant’s latest quarterly plunge is due to the broader tech slump across the board.
SoftBank’s flagship Vision Fund investment arm posted a Q4 pre-tax loss of 660 billion Japanese yen, or $5 billion. In addition, the Vision Fund’s loss on investments for the period ended December 31st was 730.35 billion yen. Overall, the SoftBank Group sustained a net loss of 783.4 billion yen, with The Vision Fund dragging it back to a quarterly loss after recording a profit in Q3.
The underperformance underscores the current trying times experienced by the SoftBank Vision Fund. The London-based venture capital fund has investments in various tech companies, including startups and more established powerhouses, which caused a direct hit to the VC’s bottom line following the sustained tech sector selloff over the past year. Some of SoftBank’s worst-hit investments were Chinese AI firm SenseTime and Indonesian technology group GoTo. The duo has experienced up to 60% stock drawdowns over the past year.
SoftBank ascribed some of its more significant Q4 losses to an “overall decrease in the fair value of portfolio companies.” According to the Japanese investment management holding company, this value decrease also reflected markdowns of poorer-performing companies and share price drawdowns in market comparable companies.”
SoftBank Seeks More Conservative Approach Following Poor Vision Fund Q4 2022 Results
Following the latest abysmal performance by the Vision Fund for Q4 2022, SoftBank’s founder Masayoshi Son provided insight into shaping future operations. According to Son, who also masterminded the Vision Fund, the venture capital fund would go into “defense” mode. In addition, Son also said that SoftBank’s Vision Fund would apply conservationism with the pace of investments following its record $27 billion loss for the last fiscal year.
Son skipped the company’s earnings call, which did not go over well with investors, following the weak quarterly performance. However, SoftBank chief financial officer Yoshimitsu Goto moved to reassure investors of the bank’s prospects and stability. Expounding on Son’s cautious approach to the company moving forward, Goto added:
“What’s most important is to take a conservative approach in evaluating the current environment. I’m still working on making better presentations.”
Goto also explained that the SoftBank Group had enough cash to go on the offensive once again if the right circumstances apply.
Vision Fund senior executive Navneet Govil also argued that SoftBank could rely on several strong companies in its portfolio. Therefore, Govil remains confident that the company will thrive while the environment recovers. He also revealed that the group’s more mature startups presently yield an estimated $37 billion of fair value. According to Govil, these funds would be deployable upon reopening the markets.
Also echoing Son and Goto’s stance on a conservative approach, the Vision Fund senior executive said:
“Significant unpredictability remains in the labor markets, future monetary policy road map, as well as corporate earnings. Our posture remains defensive, and we’re focused on building resilience.”
SoftBank was founded in September 1981 and launched the Vision Fund VC in 2017.