World’s prominent startup backer SoftBank wants its employees, around 400, to be stakeholders in its second Vision Fund. The global backer of companies like OYO, Paytm, Uber, WeWork, DiDi, Grab etc., is planning to lend up to a whopping $20 billion to its employees including CEO Masayoshi Son to buy stakes in the Fund, The Wall Street Journal reported. The fund, worth $108 billion, announced in July this year is likely to raise the amount from Apple, Microsoft, Foxconn Technology Group, Kazakhstan’s sovereign wealth fund, several Japanese financial institutions apart from its employees.
However, Son may account for over half of $20 billion -- close to a fifth of the Fund’s total corpus. Interestingly, SoftBank would put $38 billion into the Fund and hence, along with the employee pool, it would have over 50 per cent contribution to the corpus that isn’t usual for a fund sponsor. Employees could return the loan, which is likely to have a 5 per cent interest rate if the startup from the Fund grows and goes public while SoftBank might lose money on the loans if the startup doesn’t grow as expected. Uber, among its biggest bets, had earlier this year failed to deliver in its IPO as per the investors’ expectations.
However, SoftBank had lent to its employees during its $100-billion first Vision Fund that now has around $8 billion of employee money, WSJ reported. The move, according to SoftBank’s executives helps bring more accountability among employees as the fund investments can be cancelled if a manager leaves or is found to have done a ‘reckless’ deal, according to people familiar with executives’ thinking. Usually, investment funds give a share of the profits made to their employees as part of their compensation.
SoftBank has so far poured $66.3 billion from the first fund in 81 companies that have grown in value to $82.2 billion, it had said earlier this month. Moreover, it said in June that the first fund had earned 62 per cent returns while five or six companies from the fund are likely to go public by March 2020, according to Son.