SoftBank: Rethinking Its Investment Strategy

Abstract

This case is about the SoftBank Vision Fund, founded in 2017, through which SoftBank’s founder Masayoshi Son invested in several startup ventures. Using a “cluster of number one strategy,” which was investing in unicorns (startup companies with a value of over USD 1 billion), Son invested in only those startups that were either number one or had the potential to become the market leader in their respective industry. Several of his funded startups, such as WeWork and Uber, featured in the 2019 CNBC Disruptor 50 list. However, the startups had grown without realizing profits. Consequently, several startups funded by SoftBank and its Vision Fund began to show problems, such as laying off employees, and their profitability was questioned by critics. In May 2020, due to Vision Fund’s several failed investments, Softbank reported losses of USD 12.7 billion. Going forward, Son had several challenges. How should he make investment decisions regarding startups? Does he need to revisit his philosophy of aggressive growth of startups even at the cost of profits?

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