Vision Fund troubles feared to spill over to Korean e-commerce giant
During the third quarter of last year, SoftBank Group chalked up around $6.5 billion in profit based on stellar performances of its giant Vision Fund, which invested in various high-tech startups across the world.
However, the Japanese powerhouse suffered some $6.5 billion in loss during the July-September period of this year due to almost $9 billion deficit of Vision Fund.
This made SoftBank Group founder Masayoshi Son sweat. And investors start casting doubts on his high-risk strategy of pouring money into cash-burning startups.
One of the representative examples would be Korea’s Coupang, a money-losing e-commerce company that has received investment just shy of $3 billion from Vision Fund.
The Seoul-based online retailer saw its deficit top $1 billion last year. Its accumulated loss amount to $2.6 billion between 2013 and 2018.
Coupang CEO Kim Bom has downplayed it as “planned losses,” which is comparable to the early deficits of U.S. giant Amazon in the 1990s.
Then, he has promised to keep investing to beef up its leadership in the industry. And Vision Fund has underpinned the young CEO with generous funding.
However, observers worry that Vision Fund will not be able to keep supporting Coupang, which means that the Korean company may have to change its strategy to stay afloat.
It is not known how much stake Vision Fund holds in Coupang, but experts estimate it to be about 50 percent.
This means that Vision Fund would face another serious blow in case Coupang fails to make a turnaround in the not-so-distant-future.
“As Coupang’s top investor is facing troubles, the company may have to think its strategy once again,” a Seoul analyst said. “Other players are likely to hesitate to invest in Coupang due to its snowballing losses.”