SoftBank's Vision Fund has recently backed out of several start-up investments following the public spiral of its portfolio company WeWork, Axios reported Monday.
After submitting term sheets worth hundreds of millions of dollars, according to Axios, SoftBank ultimately walked away from investing in three start-ups. Sources familiar with the dealings between SoftBank and start-ups Honor, Seismic and Creator told Axios the firm repeatedly delayed the final sign-off on their investments before finally dropping them altogether. However, a person familiar with the situation says talks with Creator remain active.
"Given we're a fiduciary and investing very large amounts of capital, our investment process is more rigorous than unregulated investors and typical VCs," a SoftBank spokesperson said in a statement to CNBC. "There have been a few cases where our process took longer than anticipated, which we regret. We're always upfront with founders about what to expect and we try to keep them informed every step of the way."
SoftBank's decision to pull away from potential investments could be a symptom of its more cautious approach as it ramps up its second multibillion-dollar Vision Fund. CEO Masayoshi Son is considering focusing the investment strategy on profitability and public offerings, rather than rapid growth alone, people familiar with the matter previously told CNBC. The strategy includes slowing the investment rate for Vision Fund 2. SoftBank's original $100 billion Vision Fund spent about $80 billion in less than three years.
SoftBank had initially planned to raise $108 billion for its Vision Fund 2, but Son is now targeting a significantly lower amount, according to people familiar with the matter. Discussions with Saudi Arabia's Public Investment Fund and Mubadala Investment Company are still ongoing for both debt and equity investments, the people said. SoftBank has discussed an investment with PIF in the $15 billion range, two of the people said. That's well under the $45 billion PIF committed to Vision Fund 1, and there's no guarantee PIF will invest at that level, the people said.
The Vision Fund was called into a public reckoning after one of its most notable investments, WeWork, failed to go public after a wave of criticism over the company's financial record and unconventional corporate governance. SoftBank and the Vision Fund invested about $10.6 billion in WeWork. The firm has also suffered from meager public performances by other investments, such as Uber and Slack, as the market increasingly seems to value profits over pure growth metrics.