SoftBank’s Troubles Deepen With Warning of $16.7 Billion Writedown

Through it, SoftBank bet big on start-ups around the world, including Uber, a ride-hailing giant; WeWork, a co-working start-up; Oyo, a hospitality company in India; Coupang, an e-commerce company in South Korea; and Rappi, a delivery company in Latin America. Its aggressive deal-making pushed Silicon Valley investment firms to move faster and raise larger funds to keep up.

But cracks began showing last year, when Uber went public at a much lower valuation than expected. In October, WeWork yanked its highly anticipated initial public offering over allegations of mismanagement, and SoftBank pledged almost $10 billion to bail out the company. Both Uber and WeWork grew quickly but are unprofitable.

In November, Masayoshi Son, SoftBank’s founder and chief executive, said the Vision Fund would not offer bailouts to any more of its investments. Soon after, start-ups around the world shifted their strategies from fast growth to cutting costs and trying to turn a profit.

This year, several of SoftBank’s portfolio companies, including Brandless, an e-commerce business; Wag, a dog-walking service; Zume, a robot pizza company, and Getaround, a car-sharing company, laid off staff, scaled back or shut down. In March, SoftBank’s bet on the satellite start-up OneWeb went sour when the company announced it had filed for bankruptcy and planned to sell itself.

The spread of the coronavirus has compounded the struggles, with start-ups across the tech industry having been affected. According to Layoffs.fyi, a site tracking start-up layoffs, more than 200 start-ups have cut nearly 20,000 jobs since March 11.

Article source: https://www.nytimes.com/2020/04/13/technology/softbank-167-billion-writedown.html