SoftBank dumps dog walking start-up Wag
SoftBank has agreed to sell its near 50 per cent stake in the dog walking app
SoftBank’s tech investing trouble has continued this week, with the Japanese conglomerate announcing that it will part ways with the dog-walking start-up Wag.
Founded in 2014, Wag sought to become the Uber of dog walking, offering on-demand services via an app. The company’s future is now less certain, following news that SoftBank has agreed to sell its near 50 per cent stake.
In a memo to staff, Wag chief executive Garrett Smallwood stated: "We are amicably parting ways with SoftBank and SoftBank will no longer have Board representation. We thank the Vision Fund for their support in the company to date."
It appears that the departure of such a major investor has also triggered a number of redundancies at the company. The memo also said: "Today, we said goodbye to a number of our friends and colleagues as we align our organization with the needs of our business."
Although no exact figures have yet emerged, SoftBank’s Saudi-backed $100bn (£76bn, €90bn) Vision Fund is expected to lose money on the sale. In January 2018 the fund agreed to invest $300m (£228m, €271m) in the start-up, giving Wag a valuation of $650m (£493m, €587m).
It does not appear that SoftBank were led up the garden path by Wag, rather that they may have led themselves. Wag was involved in talks to raise much smaller amounts from other VC firms and at the time many commentators were baffled by the size of Softbank’s offer into a relatively young untested start-up.
The company has received a raft of criticism and negative press coverage in recent years, with individual reports of inappropriate behaviour from dog-walkers and even lost pets. Most importantly for Softbank, Wag struggled to adequately grow its userbase.
This debacle tops off a torrid 2019 for SoftBank and its Vision Fund. It recorded its first quarterly loss in 14 years, after two of its major investments went south. WeWork’s failed IPO attempt lost the Japanese conglomerate $6.5bn (£4.9bn, €5.8bn), while Uber’s share price dipped below $28 per share, a far cry from the $45 closed at when it listed in May.
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