Softbank Plans Vision Fund Layoffs, Streamlined Investments Amid 'Downward Trend' In Share Prices

Japanese investment management conglomerate SoftBank Group Corp. will undergo cost reductions, including layoffs, at Vision Fund, after the investment management conglomerate's venture capital fund posted over $20 billion in net loss during the second quarter. SoftBank chairman and CEO Masayoshi Son said there was a need "to cut costs with no sacred areas."

In a presentation that discussed SoftBank Group's second-quarter earnings and losses, Son said there was a need for "significant cost reductions" at Vision Fund that focuses on technological investments. The reductions will include layoffs and a more streamlined process in selecting which startups to invest in, Nikkei Asia reported. It is unclear how many employees will be laid off. As of March, Vision Fund had 387 employees.

Son has been tightening investment controls at Vision Fund over the past several months as the market value of some of the fund's investments evaporated, Reuters reported. Son's investment activity scaled down significantly this year, with Vision Fund approving only $600 million in new investments during Q1 2022. In the same period last year, the fund approved $20.6 billion in investments.

In terms of investing in startups, Son pointed out that shares of unlisted unicorns are "overvalued" compared to listed startups. Unicorns are private companies with a valuation of $1 billion or more. "There are still many managers of unlisted unicorns who think they can raise funds at a higher price because their performance has increased compared to the previous round of financing," Son said.

The billionaire went on to project that the "winter for unlisted unicorns will last much longer [than for listed ones]" if these startups refuse a lower market valuation.

News of cost reduction plans at Vision Fund came after SoftBank Group Corp. reported a net loss of 3.16 trillion Japanese yen, or approximately $23.4 billion Monday. The figure is SoftBank's biggest quarterly net loss yet. Vision Fund accounted for 2.93 trillion yen, or approximately $21.68 billion of the said net loss, CNBC reported.

Son blamed the quarter's net losses on a decline in share prices of its portfolio companies. He said the decline was triggered by a "global downward trend in share prices."

While SoftBank is looking to reduce costs, the conglomerate is also working on raising more cash, CNN reported. It has since exited ride-hailing provider Uber and residential real estate firm Opendoor Technologies. The move resulted in a total gain of $5.6 billion for SoftBank.