SoftBank’s Worst Investment Ever!

How SoftBank Lost $7.5 Billion from WeWork

SoftBank is Japanese multinational coglomerate company lead by Masayoshi Son. That means the company owns stake of many companies. Here is how SoftBank Lost $7.5 Billion from WeWork.

If you are associated with technology and startups, you may have heard the name WeWork.

The company’s founders have been believing that WeWork is a technology company but it’s business model is almost similar to a real estate company. And that’s where the trouble begins.

I have already written an article related to the founder of SoftBank Masayoshi Son and the SoftBank Vision Fund.

In laymen language, SoftBank vision fund invests in technology-based private companies. Mainly, this fund invests in startups that have a revolutionary business model.

In this fund, the SoftBank Group invited other big companies to give their money to the SoftBank Vision Fund and the company SoftBank will invest on the basis of the future business potential.

Also read: 5 Reasons Why Tesla Motors Spends $0 on Marketing?

The major investors of vision fund 1 were Apple, Foxconn, Goldman Sachs, Saudi Arabia government and SoftBank itself. The value of vision fund 1 was $100 billion.

Here, I am writing about Vision fund 1 because WeWork was a big part of the first vision fund. The popular Investments from the vision fund 1 are Ola Cabs, Oyo Rooms, Slack, Paytm, PolicyBazaar, Didi, Delhivery, Uber and many more.

Also read: #7 Reasons Why OYO Rooms is Growing Rapidly?

Also read: PayTM Sucess Story and Business Plans

Coming to the main topic…

How SoftBank Lost $7.5 Billion from WeWork

SoftBank has invested $7.5 billion in WeWork!

After the investment of SoftBank, the company valued at $24 billion dollars. The company started expanding its business in developing nations.

Basically, WeWork is a company that provides co-working space to startups. The trend of starting a business has been increasing a lot and therefore the company has got billions of dollars of funding.

Also read: Why Indian Startup Ecosystem is Flooded with Funding?

While expanding the business, the company posted a loss of millions of dollars. At the same time, the co-founder of WeWork Adam Neumann planned for Initial Public Offering. Investors did not like the concept and business model of WeWork.

The board of directors and SoftBank expected that the news related to IPO will boost the company’s valuation. And the valuation did touch to $40 billion. SoftBank has got an outstanding return on investment.

After getting worse results in every quarter, a tragic thing happened! The co-founder and CEO steps down as the CEO and sold all his stake!

This made a huge impact on valuation. If the co-founder of a company left then there might have big issues for sure!

From $40 billion valuations to $10 billion! WeWork collapsed.

And there was no doubt! SoftBank was the biggest loser.

You may think that SoftBank can recover losses from other companies but the amount was in billion! It was easily recovered if the value of the invested amount was in million dollars.

Uber IPO:

The biggest ridesharing company in the world is Uber.

So many expectations were there before the IPO. But, it failed!

The reason?

Even after the 10 years of the company, it is still not profitable! And public investors generally never prefer to invest in the companies which are operating in losses.

SoftBank Vision Fund 2:

Masayoshi Son, the CEO of SoftBank has already announced the Vision Fund 2. And this time, the fund will have $108 billion.

There are many successful investments of SoftBank but till this date, there is not a single profitable startup.

About Anuj Vohra

Hi , I am Anuj Vohra. Founder of & Saral Investment.

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