![]() Strong Returns Will Require a New Tech Elite. Assuming investors are seeking returns approaching SoftBank's historical track record of 44%, the Vision Fund will have to nurture the creation of a new tech elite.If investors are chasing a 20% IRR, there are plenty of PE funds available to participate in with strong track records investing in stable, cash-flow positive businesses rather than divisive companies like WeWork. Including the annual interest payments, this equates to roughly the GDP of El Salvador every year over this period. Even at a more modest 20% hurdle rate, the Vision Fund will need to return almost $23 billion in realized equity value per year after the fund's investment period. Return Hurdles Require Gargantuan Exits. Media reports indicate that investors are not seeking VC returns but rather private equity-like performance, targeting returns of at least 20%.The interest expense alone will be over $3 billion per year, or almost $38 billion in total. ![]() Nearly 45% of the Vision Fund's capital comes in the form of "preferred units," which carry a 7% annual coupon and will need to be paid back at the end of the fund's life.
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