This year in January, SoftBank Group Corp’s Masayoshi Son was busy writing billion-dollar checks to unicorns. He wrote these checks from co-working space WeWork to autonomous delivery vehicle designer Nuro. However, as 2019 is on the verge of an exit, the Japanese firm is straining hard to finance a $9.5 billion package for Adam Neumann’s WeWork. Sadly, WeWork’s valuation has gone down from $47 billion to $8 billion.
Tough Times For SoftBank
Days have been really difficult for SoftBank, which goes beyond WeWork. Some investors have even expressed the feeling Son’s public decisions are often troubled. The proofs for the same are not that far fetched. Consider the shares of Uber Technologies Inc. and Slack Technologies Inc.
Unfortunately, both these firms have been backed by the Vision Fund. There are several venture firms that rely on IPOs for exit and profit. The figures above indicate dark days.
What Exactly Went Wrong With Son But?
Since the last three years, Son has been threatening to back a startup’s rival, incase the founders refuse his money. He also has been investing in his nearby competitive firms, and has forced them to merge. Things got serious and bad only the SoftBank-backed IPOs started failing. Experts have been saying that Son is probably a technology guru, rather than a die-hard capitalist. One that has been reinventing the 19th-century business, by squeezing workers for an extra bit of profit.
A Look at SoftBank’s Portfolio
SoftBank hasn’t majorly invested in hard techs like AI or chip design. This is where a whopping 40 percent has been funneled into transportation and logistics companies like that of Uber. In China, three SoftBank-backed unicorns had faced 32 strikes last year. In that case, it’s just a matter of time before Governments actually step in, thus demanding better labor protections.
Experts say that there is nothing wrong with being a capitalist, just that SoftBank’s capital is really in debt. SoftBank has already amassed 4.5 trillion yen of interest-bearing net debt. However, SoftBank is running like a well-oiled machine now. However, with the Vision Fund deployed fully, Son might have trouble offloading his startup stakes. WeWork also has been put under the SoftBank umbrella that has made matters worse for the office sharing space. SoftBank also needs to figure out possible ways of figuring out how to finance the office leasing company’s $47 billion in lease liabilities.
Some More Numbers
Son’s track record state that if there’s anything he is actually good at, it’s financial engineering. SoftBank’s investment playbook is also mysterious. For example, if its buys shares in a startup and puts in more money later on, SoftBank claims to have made a profit. In June, it booked around $3.8 billion in unrealized games, partly due to a series of investments in Oyo.
Out of the $11.4 billion capital gain, the Vision Fund had booked about $4 billion in two deals. The sale of Indian e-commerce company Flipkart Online Services Pvt. to Walmart Inc., and well-timed trades in Nvida Corp.
Probably in the upcoming days, Son will have to show his cards. His incubator has given birth to many expensive decacorns. Some of them include Bytedance Inc., Didi Chuxing Inc. These firms have a valuation of more than that $10 billion and would be easily considered as large caps in public markets. Till then, we would have to wait and only after that would we find out if Son is a visionary or just a basic capitalist.
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