SoftBank's massive tech fund bolsters profits thanks to bets on Slack and DoorDash

Key Points
  • Operating profit at the Vision Fund rises 66% year-on-year to 397.6 billion yen.
  • SoftBank's operating income falls nearly 4% but beats analyst expectations.
  • Profit from SoftBank-owned chip designer Arm drops by 156.8 billion yen.
SoftBank Group Corp. Chairman and Chief Executive Officer Masayoshi Son speaks during a press conference on May 10, 2017 in Tokyo, Japan.
Tomohiro Ohsumi | Getty Images

SoftBank said profits from its $100 billion Vision Fund experienced a big jump in the fiscal first quarter, bolstered by bets on tech companies from Slack to DoorDash.

The Japanese conglomerate has shaken up the tech investment landscape in Silicon Valley and beyond, pouring billions of dollars into fast-growing start-ups as well as publicly-listed firms.

In its latest quarterly earnings report, operating profit at its Vision Fund and Delta Fund — the latter only holds one investment, the Chinese ride-hailing giant Didi — rose almost 66% year-on-year to 397.6 billion yen ($3.7 billion).

That was largely thanks to valuation increases from Vision Fund portfolio companies OYO, Slack and DoorDash, SoftBank explained. The Vision Fund's $66.3 billion investment into 81 tech companies is now worth $82.2 billion, the company said.

Out of those investments, food delivery platform DoorDash saw a massive rise in its valuation, with a $600 million round in May increasing its post-money valuation to $12.6 billion from $7 billion, according to Forbes.

Workplace messaging tool Slack recently went public on the New York Stock Exchange through a direct listing. The firm is now worth around $15.6 billion, versus the $5.1 billion it was valued at when SoftBank first invested back in 2017.

Softbank said that its overall operating income in the three months ended June 30 actually fell nearly 4% year-on-year to 688.8 billion yen.

The group's earnings was dragged down by a 156.8 billion yen drop in profit from chip designer Arm, which sold a controlling stake in its China business to a consortium of local investors last year.

The firm still beat expectations though, coming in higher than a 336 billion yen estimate from analysts polled by Refinitiv, according to Reuters.

SoftBank recently announced that it would launch a second mega fund devoted to artificial intelligence companies. The firm said it plans to contribute $38 billion into that fund, while other backers include Apple and Microsoft.

The main Vision Fund is largely anchored by Saudi Arabian money, and this sparked controversy last year following the murder of Saudi journalist Jamal Khashoggi, who had criticized the country's government.

SoftBank's CEO Masayoshi Son said in November 2018 that the incident wouldn't shake his ties with the country, claiming the firm has a "responsibility to the people of Saudi Arabia."

The Wall Street Journal reported earlier this year that SoftBank was considering an initial public offering for Vision Fund. The company is also in talks with Oman for an investment in the fund, the Journal reported, citing people familiar with the matter.

Correction: This article has been amended to reflect the fact that operating profit at SoftBank's Vision Fund and Delta Fund rose almost 66% year-on-year to 397.6 billion yen ($3.7 billion).