The longtime strategy planned out by SoftBank to finance the young yet promising companies in order to establish the immense winners has failed; starting at WeWork and is extending up to some of its other investments as well.
The Vision Fund of $100 billion initiated by SoftBank gave away companies like Plenty and Wag, an indoor farm company and dog-walking app, respectively more money than they had initially been requiring; and the investment backfired as these start-ups failed to ignite any forms of growth. After making a significant bet on Fair, which is an online car-lessor company, it is struggling to remain afloat. People familiar with the matters say that now Wag is up for sale.
Some other companies including Coupang, which is an e-commerce company based in South Korea and Didi Chuxing, which is a ride-hailing giant of China are known in their respective industries for burning out their funding for heading towards uncertain profitable paths.
According to the latest reports, Didi Chuxing, which is one of the most significant investments of Vision Fund of SoftBank at $11.8 billion was found to be seeking for more funding this summer, which was months after the executive of the company said that it was significantly losing cash on the fares that were booked. The South Korean Company –Coupang, in which SoftBank has invested about $2.7 billion said that its operating loss was higher than the revenue generated last year.
After the failure of IPO of WeWork SoftBank was forced to invest further $9.5billion for bailing out WeWork in order to salvage its 9 billion dollars investment, which further helped in souring the big-spending market because of the unprofitable funds. This incident has also drawn some attention to the investment strategies executed by SoftBank, which had received considerable successes in the past.
On Wednesday, SoftBank will be kept under scrutiny when the investment company will release its earnings. The expert analysts have already started to make their predictions about Vision Fund and SoftBank having to bear heavy losses in billions for marking down the investment values of several companies.
The Investors are keeping a close watch in the performance of the funds carefully specifically because SoftBank is planning to raise more funds for the second version of Vision Fund, which shall be more significant than the first one. A SoftBank spokesperson had to say that all the investments made on different companies are performing at different levels.