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SoftBank Group plans to cut at least 20% of staff in its Vision Fund operation, although in Latin America “nothing has been decided yet,” according to a SoftBank’s spokesperson in the region.
“As Masayoshi Son said in the latest results presentation, we are reviewing the size of our organization and the structure,” SoftBank said in a response to a Bloomberg Línea inquiry about its Latin American operations.
The Japanese conglomerate is expected to lay off at least 100 people, and may announce the cuts later this month, according to people familiar with the matter who asked not to be identified because the discussions are private, Bloomberg News reported.
The cuts will be mainly in the UK, US and its China operations, which have the largest number of employees, the source said. The Vision Fund unit has about 500 employees, including the SoftBank Latin America Fund team, which had been merged into the Vision Fund this year.
What will Latin America look like for SoftBank?
Bolivian Marcelo Claure was a key player in the venture capital ecosystem in Latin America when he convinced Son to look at the region by leading a growth-specific fund: the SoftBank Latin America Fund. Since the Latin America Fund’s inception in 2019, SoftBank has managed about $8 billion across two funds, I and II, turning a number of companies in the region into unicorns.
But when Claure left the firm earlier this year over a disagreement over his remuneration, SoftBank went through a kind of musical chairs with key executive positions relating to its operations in the region.
Claure subsequently ended up settling for a $94 million ‘golden handshake’, but his departure caused a domino effect.
One of the consequences was the split with the fund focused on early-stage investments.
Former Redpoint Ventures’ Rodrigo Baer and his partners went to SoftBank to set up the fund focused on investments in early-stage startups in Latin America, an area in which where the Japanese conglomerate was not in the habit of investing in the region. Baer told Bloomberg Línea that the early-stage fund operated a little apart from SoftBank’s core group, as the early partners had a special arrangement with Claure.
“There were some things that we were able to do in early-stage that was not the rule of the parent SoftBank. It was an agreement that we had with Marcelo. When Marcelo left, we thought people tend to forget agreements, so we took advantage of the fact that it was already a little bit separate and we separated it for good,” Baer said.
SoftBank does not pay “carry” [commission] to fund managers, but Claure had guaranteed that payment to the early-stage fund, Bloomberg Línea was able to ascertain.
SoftBank’s Latin America Fund I comprised $5 billion. When the company announced the $3 billion Fund II in September last year, the first was practically wholly invested.
Vision Funds do not invest in Latin America through Latin American funds, which have different management, logics and managing partners. There are Latin American companies, for example, that will receive different contributions from SoftBank via Latin America Funds and Vision Funds together, which is the case of Creditas. Funds for Latin America are independent, although the vehicles for the region are under the supervision of Vision, and they all operate within the administrative structure called SBIA - SoftBank Investment Advisers.
Today, Vision Fund and Vision Fund II total approximately $140 billion, while Latin America Fund I and II have $8 billion under management, of which $7.68 billion has already been allocated. In addition, Latin American funds have a pool of $2 billion at their disposal that has not yet been tapped. It means SoftBank still can deploy nearly $2.4 billion in Latin America.
The decision to split the early-stage fund was made in January and in April the fund spun off from the Japanese conglomerate, although it still has it as its largest limited partner, as well as family offices, banks, and other institutions that guarantee the money managed by Upload Ventures.
With the departure of Claure, who was the SoftBank’s COO, the conglomerate transferred responsibility for its Latin American funds to Indian executive Rajeev Misra, who managed the Vision Fund. But in July Misra announced he was relinquishing part of his position to set up his own investment vehicle.
Misra, who helped Son create the startup-focused Vision Fund with nearly $100 billion in 2017, is leaving his positions as chief corporate officer and executive vice president at SoftBank, the company said in a statement on Wednesday. He will continue to oversee existing investments under the first Vision Fund, while Son said he will take over the management of new investments under the second Vision Fund.
With Claure and former chief strategy officer Katsunori Sago stepping down in 2021, Son, who turned 65 in August, has been taking on more and more responsibilities at the company he founded 40 years ago.
Bloomberg Línea asked SoftBank about the management of funds for Latin America with Misra’s departure, with the conglomerate responding that it had not defined who would fill Misra’s role, although his departure would have little impact on the day-to-day operations of Latin America, which “has always been autonomous, regardless of the global ‘cacique’ that oversaw it,” said Eduardo Vieira, cead of communications for SoftBank in Latin America.
“Alex Szapiro and Juan Franck lead Latin America, and the final word is always Masayoshi’s,” Vieira said of the executives who previously reported to Misra.
Szapiro and Franck are also new figures in SoftBank’s leadership positions since senior executives Paulo Passoni and Shu Nyatta, hired by Marcelo Claure, who managed the funds for Latin America, left the fund. Today, Passoni says he is ‘on leave’ for the next 240 days.
-- With information from Bloomberg News