How China’s regulatory crackdown whomped Vision Fund 1’s returns

SoftBank lost some investing preeminence in recent years as names like Tiger and a16z rose to new heights thanks to rapid-fire deal-making and eager willingness to prepay for startup growth. But as SoftBank continues to cut checks from its Vision Fund 2, we’re still seeing results trickle in from the time when the Japanese conglomerate was the world’s key startup backer thanks to its megasized Vision Fund 1.

And the recent news is less than stellar.

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SoftBank’s earnings, disclosed today, include sharp losses from Vision Fund 1 after several of its key investments lost value. There was good news in the mix as well, but reported gains were only able to blunt losses other investments racked up.

Now, notably, we get to chat about Middle Eastern money, Chinese regulation, the U.S. stock market and SoftBank at the same time — they are all connected. This will take a little explaining, but, yes, we’re talking about Didi.


Crunchbase data lists three separate investments from SoftBank into Didi, the Chinese ride-hailing giant that famously won a fight with Uber over its domestic market. SoftBank’s Vision Fund 1 was, of course, also an investor in Uber. It’s complicated.

The Japanese telco and investing behemoth was a big enough shareholder in Didi at the time of its IPO that TechCrunch noted it controlled around 21.5% of the ride-hailing company at that moment.

When Didi went public at $14 per share, it was worth around $67 billion. Since then, things have gone poorly for the company, which ran afoul of Chinese regulators, who made it stop accepting new customers and pull its app. Shares of Didi — a company firmly outside the good graces of the Chinese Community Party — are now worth just $8.12 per share.

SoftBank reckons that after investing a total of $12.073 billion into Didi through its Vision Fund 1 vehicle, its investment was worth just $7.544 billion as of September 31, 2021, and $7.864 billion as of November 5, 2021. The gap between the company’s investment price and current value is stark.