Internet and telecommunications group SoftBank’s Vision Fund has withdrawn from several large-scale investments in recent months, Axios reported yesterday, citing sources close to each company.
The fund has pulled out of investments with at least three companies having submitted term sheets months before and subsequently delaying their investments.
Vision Fund submitted a term sheet for senior care provider Honor in November 2019, reportedly to invest about $150m, and SoftBank chief executive Masayoshi Son gave the go ahead after a meeting with Honor CEO Seth Sternberg.
The fund had initiated due diligence, telling Honor it was running ‘process stuff’ but pulled out of the transaction late last month stating that Son had changed his mind, a source said.
Creator, the food-preparation robot developer formerly known as Momentum Machines, had raised a total of $25m before signing an exclusive, six-month term sheet with Vision Fund in 2019 for an investment set to be ‘many multiples’ of that amount.
However, the company faced a series of unexplained postponements and proposed a co-lead investor for the round. Eventually, SoftBank agreed to make an interim investment of between $10m and $15m.
Sources told Axios last month that the original deal was ‘dead’ but a source close to SoftBank said negotiations between the companies are still progressing.
Enterprise sales software producer Seismic was approached by SoftBank in mid-2019 with a term sheet it found ‘hard to refuse,’ offering a high valuation, help with entry into the Japanese market and the chance for some early investors to sell shares.
The companies agreed a deal in early August and Seismic was told it would likely be the last investment out of the first Vision Fund, then that it would be the first or second deal out of Vision Fund II. But following a visit by Seismic CEO Doug Winter to Japan in early October, the investment was called off.
It is unclear why precisely Vision Fund has pulled back from the deals, but it may well have to do with the blowback from the failure of its largest investment, WeWork, to float in September 2019.
SoftBank has also reportedly had trouble raising capital for Vision Fund II, having only closed $2bn of a targeted $100bn as of November.
Reports last month suggested the second fund would be substantially smaller than its predecessor, which suggests SoftBank is being more careful with its investments than the original Vision Fund, or simply that the vehicle does not have the cash on hand to make large investments to the same degree.
SoftBank responded in a statement saying: “Given we are a fiduciary and investing very large amounts of capital, our investment process is more rigorous than unregulated investors and typical VCs.”
“There have been a few cases where our process took longer than anticipated, which we regret. We are always upfront with founders about what to expect and we try to keep them informed every step of the way.”
