DUBAI/RIYADH (Reuters) - Big investors who are critical to SoftBank Group’s plans for a second massive technology investment fund are refusing to take part unless the first $100 billion Vision Fund can turn around its performance, sources familiar with the talks told Reuters.

SoftBank chairman Masayoshi Son on Wednesday acknowledged the lack of commitments for Vision Fund 2, but vowed to forge ahead with his investment strategy using SoftBank money.

That approach could prove difficult in the wake of news last week that activist investor Elliott Management has built up a stake of nearly 3% in SoftBank and will pressure the company to spend its cash on share buybacks.

The first Vision Fund lost $2.5 billion in the quarter ended December, SoftBank reported Wednesday, largely as a result of a disastrous bet on office-sharing company WeWork.

Three sources familiar with the discussions told Reuters the two biggest backers of the Vision Fund - Abu Dhabi’s state fund Mubadala and Saudi Arabia’s PIF sovereign wealth fund - had declined to commit to Vision Fund 2, though some conversations were ongoing.

One of those sources said iPhone-maker Foxconn, which Son said last year had committed in principle to the new fund, was also pulling out.

Mubadala, PIF and Foxconn did not immediately respond to requests for comment.

Son upended start-up tech investing with the Vision Fund, making massive bets on scores of unproven companies in sectors ranging from ride-hailing to real estate. The fund now has stakes in 88 companies, but many of them have shown disappointing results, forcing the fund to write down their value.

SoftBank says it has invested $74.6 billion in the 88 companies, and according to its internal valuations those investments are now worth $79.8 billion. The unusual structure of the Vision Fund also requires interest payments of 7% to some of its investors.

The sources said Mubadala was continuing discussions with SoftBank but was unlikely to commit to the new fund in the foreseeable future.

“If Mubadala goes in, then it becomes difficult for PIF to say no. But the overall sense is that it’s not going to happen - both PIF and Mubadala won’t go in,” said one of the sources.

SoftBank said last year it had secured Vision Fund 2 pledges from backers including Microsoft MSFT.O, Apple Inc AAPL.O, Hon Hai Precision Industry Co Ltd (Foxconn) 2317.TW and others, and suggested the second fund could be even bigger than the first.

But Reuters reported in October that major investors were yet to sign on, leaving a $38 billion pledge from publicly-traded SoftBank Group itself as the only large commitment.