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Technology Stocks : Softbank Group Corp -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (5988)	7/8/2022 7:25:45 PM
From: Glenn Petersen	Respond to of 6018

Softbank’s Unicorn Herd Turns Vicious Senior staff departures and widening signs of stress in private markets mean more trouble ahead for one of the tech boom’s leading cheerleaders By Jacky Wong Heard on the Street Wall Street Journal July 8, 2022 6:26 am ET The technology-startup world is facing a reset. SoftBank, 9434 -0.97%? which epitomized the zeitgeist of the boom years, is facing its own reckoning. The Japanese company is weathering a shake-up at the top. Rajeev Misra, who helped to create the $100 billion Vision Fund in 2017, will step back from his current role in SoftBank to run a new investment fund outside of the company. The former Deutsche Bank trader will continue to oversee the first Vision Fund, but will give up that role for its successor, Vision Fund 2. Mr. Misra’s decision followed the departures of other senior executives at SoftBank. Such staff changes may mean even less ballast to balance out the rash investment style of SoftBank’s founder Masayoshi Son. For example, Mr. Misra lobbied internally against a big investment in office-sharing startup WeWork, which ended up in disastrous write-downs for SoftBank. Mr. Son is known for bidding up valuations of startups, offering them more money than they need and encouraging them to spend that money relentlessly in pursuit of growth. Such a model may be fine in a buoyant market, but certainly doesn’t work in the current downturn. SoftBank is dealing with this washout as funding in the tech industry writ large is drying up. Sweden-based buy-now-pay-later company Klarna is seeking new funding at a valuation of $6.5 billion, an 86% markdown from when it raised money in a SoftBank-led round at $45.6 billion in June last year. It’s hard to avoid a certain feeling of déjà vu: SoftBank witnessed a similar implosion at WeWork in 2019. Globally, venture capital funding in May fell 14% month-on-month to $39 billion, nearly half its peak of $70 billion in November, according to Crunchbase. Late-stage investing was even worse, which fell 40% from the monthly average in 2021. As startups are usually reluctant to do “down rounds”—funding rounds that value them lower than previous ones—Klarna’s case may only be the beginning. About half of Vision Fund 1 and three-quarters of its successor fund are invested in unlisted companies. SoftBank has already suffered huge losses on its listed investments: It reported the largest-ever loss for the fiscal year ending in March. Around a third of the first Vision Fund’s outstanding capital comes from preferred stock, which has to pay a 7% annual coupon. This debtlike structure means SoftBank will need to find cash to pay the investors even in a downturn, one way or another. SoftBank’s outsize bets have helped push tech valuations into the stratosphere. Coming back to earth will inevitably be painful—and quite possibly messy. Write to Jacky Wong at jacky.wong@wsj.com SoftBank’s Unicorn Herd Turns Vicious - WSJ