Weeks after SoftBank’s Vision Fund planned a towering $16B investment in WeWork, it will reportedly pare down what would’ve been a majority stake in the company to just $2B.
It’s fair to assume the investment firm got cold feet over its massive investment in a wildly unprofitable, $20B shared office space provider. But, as The Wall Street Journal points out, for the first time, market turbulence has exposed a crack in SoftBank’s financial armor as well.
The cash king isn’t as liquid as it anticipated
The original $16B plan would’ve been one of the largest investments ever in a private tech startup — a risky bet for SoftBank, which weathered a 36% drop in share price since its September peak (not to mention a disappointing IPO for its Japanese mobile unit).
That said, SoftBank’s confidence in the company formerly known as WeWork (now rebranded to We Company) has long been controversial among higher-ups and investors. Many felt WeWork’s valuation was lofty for a “tech” startup focused mainly on costly real estate.
But let’s not get our Vision Funds in a bunch
Maybe WeWork’s valuation is… overhyped, and maybe SoftBank’s balance sheet ain’t as liquid and limber as once boasted, but $2B is still an ungodly sum of money.
It brings SoftBank’s total investment in the company to a solid $10B, and, as Axios points out, if the tech market was in trouble, not even an investor as trigger-happy as Masayoshi Son would drop that kind of dough.
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