SoftBank is paying for Son’s past exuberance

FILE PHOTO: Japan's SoftBank Group Corp Chief Executive Masayoshi Son attends a news conference in Tokyo
Japan's SoftBank Group Corp Chief Executive Masayoshi Son attends a news conference in Tokyo, Japan, Nov. 5, 2018. REUTERS/Kim Kyung-Hoon/File Photo/File Photo

LONDON, Feb 7 (Reuters Breakingviews) - Warren Buffett once advised investors to be fearful when others are greedy and greedy when others are fearful. SoftBank Group's (9984.T) boss Masayoshi Son is doing the exact opposite. The Japanese technology investor’s results on Tuesday showed that its flagship Vision Funds only invested about $350 million in startups in the three months to the end of December, compared with $9.6 billion in the same period a year earlier. In other words, Son and his dealmakers spent big when valuations were unsustainably high and then retreated as prices slumped.

It’s not a great way to make money. SoftBank’s family of startup-investing vehicles, including the two Vision Funds and a Latin America-focused one, have clocked up $6.6 billion of cumulative losses on their investments since 2017. Son, who has also stopped leading the company’s earnings calls, seems to be chastened by all the red ink. Another explanation for his slower pace of dealmaking is that he simply can’t do more. As of December 2022, the second Vision Fund had already drawn over 90% of its committed capital. In other words, Son is out of ammunition just when it would be the most useful. He has no one to blame but himself. (By Karen Kwok)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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