× Expand Shizuo Kambayashi/AP Photo SoftBank Group CEO Masayoshi Son speaks during a presentation at a Tokyo hotel in 2017.

This was supposed to be the year of the giant tech IPO. A number of Silicon Valley’s unicorns—startups with billion-dollar-plus valuations like Uber, Lyft, Palantir, and Airbnb—announced their intention to offer stock publicly, and Wall Street salivated. Some 226 private companies, with a combined valuation of nearly $700 billion, were expected to go public by year’s end. Their offerings were predicted to raise $100 billion within a matter of months, obliterating records set in 1999 and 2000. Another tidal wave of cash would flood Silicon Valley, minting more new millionaires and billionaires than any other stretch during the current boom, which has gone on basically undeterred for nearly a decade.

That’s not how it’s played out. In recent months, the IPO fever dream of Silicon Valley’s darlings has turned nightmarish, ranging from the misguided to the catastrophic. It came to a head in recent weeks, with shared office space upstart WeWork’s recently shelved IPO attempt, a huge comedown after Wall Street raised expectations of an unstoppable, $100 billion juggernaut. Along the way, the company fired its CEO, saw its market value drop by two-thirds, announced thousands of staff cuts, and began pulling out of many of its leases, trying to stem $700 million in quarterly losses.

Meanwhile, Uber’s IPO, while it actually made it to the stock exchange, has been a record-setting disaster of its own. The ridesharing app set $30 billion in market capitalization on fire in less than five months, amid piles of massive quarterly losses and a legislative defeat in California that may force it to treat drivers as employees. Instant-messaging company Slack, which only mustered a halfway-decent public offering, has seen its shares plummet roughly 35 percent since June, after it was discovered that the company relies on 575 customers for 40 percent of its revenue.

These companies have plenty of things in common. The combination of gargantuan valuations, no assets, and a proven inability to turn a profit makes for a uniquely terrible starting point when it comes to long-term financial viability. But beyond that, the through line connecting them all, and the reason they’ve risen to such vertiginous financial heights only to be pushed out onto the ledge, is one single investment vehicle: the SoftBank Vision Fund.

A closer look at the massive, debt-addled fund helps shed light on just how Silicon Valley’s courtship of Wall Street careened so wildly off the rails, and for whose benefit that IPO binge has occurred.

At the moment of its inception in 2017, the SoftBank Vision Fund, at roughly $100 billion, was the largest venture capital fund ever raised. That money, assembled quickly with roughly $60 billion combined from Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Company, as well as $33 billion from SoftBank and its employees, turned Masayoshi Son, the company’s chief executive, into the most important tech investor in the world.

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The unique structure of the fund meant that the company quickly began feasting on debt to help boost returns. According to The Wall Street Journal, about 40 percent of the money promised to the Vision Fund by investors other than SoftBank takes the form of preferred stock, which promises a return of 7 percent a year regardless of the fund’s performance, just like debt. That structure is peculiar for a fund so focused on young, money-losing companies with no clear path to profitability, in the short or long term.

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Under that structure, the fund’s stockholders get big returns on the way up. But for holders of the non-preferred stock, half of which belongs to SoftBank and its employees, the potential for losses on the way down is huge. A recent analysis by The Wall Street Journal showed that “the fund would need to generate around $12 billion in cash every year to produce a 20% return.”

The Vision Fund isn’t merely staked by money that functions like debt; it’s also got plenty of traditional debt as well. SoftBank’s $33 billion stake in the fund also relies on borrowed money, while the company itself has more than $160 billion in interest-bearing debt on its balance sheets. That figure, according to TechCrunch, is more than six times the amount the company earns on an operating basis, and just slightly less than the public debt held by the government of Pakistan.

That’s not the only peculiar trait of the Vision Fund. The company has extended about $5 billion in loans to employees to invest in the fund. Again in late September, the call went out to encourage employees to take out large personal loans to buy further into the fund, and prop it up with much-needed cash. Not only is the Vision Fund overextended, so are the people most intimately involved with it.

Some executives have been encouraged to borrow more than ten times their salary, according to the Financial Times, a move that is expected of its employees, as a test of loyalty to Masayoshi Son. Son himself has already pledged 38 percent of his shares in SoftBank as collateral for personal loans from 19 financial groups globally, including Mizuho, Credit Suisse, Julius Baer, and Switzerland’s J. Safra Sarasin.

Despite what now looks like a dire, debt-ridden financial picture, SoftBank had a few early wins in the tech sector. An investment in Alibaba netted Son’s company a massive haul, estimated at $100 billion. The Vision Fund scored $1.5 billion in a bet on Flipkart, the Indian e-commerce company that was eventually sold to Walmart.

But the numbers in the loss column are beginning to add up. The Vision Fund put up $300 million for a 45 percent stake in Wag, the dog-walking app, which ballooned its valuation to $650 million, and holds a 22 percent stake in Compass, a real-estate firm masquerading as a tech company that many consider to be grossly overvalued as well. Even one-time winners like cancer-test company Guardant Health, whose shares nearly quadrupled from their IPO price, are now trading below where they were at the end of June, potentially requiring them to be marked down. In August, the Vision Fund announced it would borrow up to $4 billion against its now rapidly falling shares of Uber and Guardant to return cash to its investors. The Wall Street Journal called the arrangement “unusual.”

Given the fund’s massive debt obligations; its hefty, performance-irrelevant annual payouts to investors; and its need to yield billions in profits steadily, it’s no surprise that it’s placed huge pressure on these tech investments to bear fruit quickly. And while one might assume the WeWork debacle has slammed shut the IPO window for the time being, IPOs are critical to the fund’s strategy, given that the companies themselves don’t make money. In fact, IPOs remain the primary way to cash out of these investments, which is increasingly necessary to pay down this startling array of loans.

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Son has said he’s still banking on five or six IPOs from its portfolio during the fiscal year ending March 2020, and ten more the following year (there may be some path dependency here, as SoftBank itself was the second-largest IPO ever, helping the conglomerate reach its current stature). The company has made other bad bets outside of the fund: In 2013, it paid $21.6 billion and took on billions more in debt to buy Sprint, which promptly fell behind the smaller T-Mobile after a series of failed merger attempts (Sprint is attempting to merge with T-Mobile now, pending a lawsuit from over a dozen states).

Still, the fund’s positions in Uber and WeWork may portend its fate, since the two companies make up a significant percentage of the fund’s principal outlay. SoftBank backed Uber in early 2018, buying out existing investors for $48.77 a share and purchasing new shares at just under $33 a piece. All told, they threw in roughly $8 billion. As of early September, they were more than $600 million underwater on that investment, as the stock continues to set all-time lows, while the company pours money into legal battles.

The numbers on WeWork could be even worse. The fund handed over some $11 billion to the company on the way to a 22 percent stake, which helped the company arrive at its $47 billion valuation. According to Scott Galloway, a professor of marketing at NYU Stern School of Business, it’s likely the fund won’t even recoup its principal on that investment. “WeWork is the opportunistic infection that is going to kill the Vision One Fund. It’s beyond repair. Between Uber and WeWork, you have $20 billion of the hundred billion. One is likely going to be a zero—that’s WeWork—of $11 billion,” he told New York magazine. “WeWork declined in value more in 30 days—SoftBank and all these smart people had their shares on their books at $47 billion—it went to zero in 30 days.”

Other estimates have the Vision Fund losing more than $5 billion on those two investments. SoftBank needs WeWork to maintain a $24 billion valuation to even break even. For a fund that needs to make billions a year to pay off its investors, steep losses could be existentially threatening.

Son has simultaneously continued to try to raise money for another fund, Vision Fund II, at $108 billion, focused on investments in AI. But according to the Financial Times, the only binding pledge to that fund so far comes from SoftBank itself, dedicating $38 billion of its own money. The other entities that have committed, via nonbinding memorandum, to provide the remaining $70 billion have raised eyebrows: the National Investment Corporation of the National Bank of Kazakhstan, for example, only had assets of $107 million in 2018.

SoftBank isn’t the first investment group to get itself overleveraged on risky enterprises. The investment bank Bear Stearns sported two heavily indebted hedge funds that fattened themselves on the can’t-miss asset class of the day, securities backed by subprime mortgages. Not unlike SoftBank, these funds borrowed against their underlying assets to gain leverage. In 2007, the funds began to collapse; less than ten months later there was no Bear Stearns. SoftBank, as a massive conglomerate, is different from Bear in many ways, but its massive exposure to an overvalued, plummeting asset class holds a familiar lesson.

And looking back only one busted asset cycle further, Masayoshi Son learned (and seemingly forgot) a brutal lesson playing the tech market in the late 1990s. At the height of the first tech bubble, Son was the richest man in the world. He plowed money into risky investments, often coming on board late with gargantuan sums of money. When that bubble burst, Son was hit hard. He’s rumored to have lost some $70 billion, the most ever lost by an individual in human history.

If there’s a silver lining, it’s in the fact that the major investors in the Vision Fund, which may well capsize, are the investment funds of Abu Dhabi and Saudi Arabia, as well as Son, who has cozied up to Donald Trump and had no problem continuing to take Saudi money after the assassination of Jamal Khashoggi. In other words, it couldn’t be happening to a more deserving bunch.

Son is now making the rounds offering up apologies for his firm’s largesse. It seems unlikely that will be enough to save Vision Fund II. But the fate of Vision Fund I may also determine the fate of our second tech bubble, which now, for the first time in years, seems primed to burst.