Vision Fund, which is part of the ownership structure of the Japanese corporation SoftBank Group, announced its first profit.
The achievement of the financial profit indicator, which is a historic event for this fund, since it is the first positive result of activity in the history of its existence from the point of view of the economic aspect, is to a certain extent due to the global technological upswing. The trend of active development of the technology sector has contributed to an increase in the value of some Vision Fund investments. More than a year has passed since the beginning of the history of the fund’s existence to the landmark stage in the form of receiving the first profit.
Vision Fund recorded a profit of 61 billion yen ($426 million) in the second quarter of this year. For the same period last year, this organization received a result in the form of losses, the amount of which amounted to 2.33 trillion yen ($16.2 billion).
SoftBank also reported that in the second quarter of 2023, the net loss of the entire group, which is the general structure of its ownership with all divisions, reached 477.6 billion yen ($3.3 billion). A year earlier, the loss rate was recorded at 3.16 trillion yen ($22 billion).
The overall financial result of the group, owned and managed by a Japanese corporation, turned out to be negative due to paper losses on its shares in Alibaba Group Holding, Deutsche Telekom AG, and T-Mobile US.
The last fiscal year for Vision Fund was marked by a loss of 4.2 trillion yen ($30 billion). This is a significant indicator in a negative sense, even for a start-up fund.
In 2017, SoftBank started implementing a business concept that provided for the provision of investment funds for the development of startups located in the so-called loss zone. Since then, the corporation has spent billions of dollars on this activity. As a result of the financial injections of SoftBank, the estimates of unprofitable startups were overestimated. Then the scenario of a change in the state of affairs began to be implemented, which largely disrupted corporation plans. In 2020, firms at the initial stage of development became victims of technological repression by China. Last year, the situation of startups worsened as a result of the implementation of the policy of raising rates by the US Federal Reserve. But over time, the situation returned to normal.
The Nasdaq 100 index, reflecting the dynamics of technology stocks, rose by 15% during June, as a result of which this indicator reached its maximum value for the first half of 2023. A high level of interest in artificial intelligence, including investment, which provides for specific practical actions in this industry, and a decrease in the degree of concerns about the prospects for the dynamics and vector of changes in interest rates have become positive factors. Against this favorable background, SoftBank has increased the volume of financial injections into companies such as Grab Holdings, Coupang, and Roivant Sciences.
Tomoaki Kawasaki, senior analyst at Iwai Cosmo Securities, says that current trends regarding investing in the technology sector will continue in the foreseeable future. SoftBank founder Masayoshi Son announced that Vision Fund will resume investing in startups in the near future.
The corporation’s strategy, implemented since 2017 and providing financial support for unprofitable firms at the initial stage of development, makes sense. The obvious fact is that a startup cannot make a profit from the first day of its existence, and no less obvious is the need to invest in companies whose history, as a kind of movable structure of dates and numbers, takes the first steps in the vast space of existence. The support of promising firms after some time can demonstrate impressive profitability. In this case, there are also natural risks. Not every startup can be successful. Some companies do not stand up to competition or exist within the framework of a tough market struggle, but they do not even approach the podium of the leader. It is also worth considering the factor of the impact of external global processes and events, which in terms of scale and strength are many times greater than everything that happens in corporate business sectors.
Vision Fund invested 228 billion yen ($1.6 billion) in the second quarter. This indicator is equal to a small part of the costs Son in the early years of the existence of this unit of the corporation.
SoftBank Arm, a semiconductor and software developer, recorded a loss of 9.5 billion yen ($6.6 million) in the second quarter. The reason for the negative indicator is a decrease in sales volumes by 11%. This unit of the corporation will make its debut on the market in September and plans to raise financing in this regard.
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