Apple-backed startup fund loses $8.9 billion in 3 months

Apple-backed startup fund loses $8.9 billion in 3 months


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Apple invested $1 billion in the fund in 2017.
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A $100 billion SoftBank Vision Fund that Apple invested in has published a quarterly loss of $8.9 billion. The fund backs promising (or seemingly promising) startups.

SoftBank Group founder, chairman and CEO Masayoshi Son announced the disappointing returns today. “My investment judgment was poor,” Son said.

Apple and Japanese telecom company SoftBank have a long history of working together. Apple revealed that it was investing $1 billion in the Vision Fund back in January 2017. The overall $100 billion fund has so far invested $70.7 billion in 88 startups.

The Vision Fund’s disappointing return contributed to SoftBank’s first quarterly loss in 14 years. The main contributor to the Vision Fund’s loss appears to be its backing of troubled co-working startup WeWork. WeWork has collapsed in a way that’s rarely seen among unicorn tech companies. In a single month, its valuation declined from $47 billion to under $10 billion. It also removed its CEO and delayed a planned IPO indefinitely.

Investments in Uber, Slack Technologies, and Guardant Health also declined over the quarter.

Startup fund helps Apple find new opportunities

This news isn’t as bad for Apple as it might sound, though. It reflects more on Masayoshi Son and his habit of funding unconventional founders. Overall, the Vision Fund fund remains buoyant. Having invested $70.7 billion so far, the fund is currently worth $77.6 billion overall.

Despite its massive cash pile, Apple certainly wants to make money from the investment. However, there are other reasons for investing. “We believe their new fund will speed the development of technologies which may be strategically important to Apple,” Apple spokeswoman Kristin Huguet told the Wall Street Journal in early 2017. If one of these companies is able to use the cash invested to develop some amazing new technology, Apple could ultimately stand to benefit.

At a total investment of $1 billion, Apple’s stake in the Vision Fund is relatively limited. (Or as limited as $1 billion ever is!) SoftBank put $25 billion of its own money to the fund. Other contributors include Saudi Arabia’s government, which invested $45 billion.

Source: CNBC