SoftBank-backed companies announce staff layoffs

By Yana Berman

As SoftBank tries to rescue its troubled start-up WeWork, other companies backed by Japanese giant are firing employees

                                

Several start-ups backed by Japanese technology conglomerate SoftBank have announced that they are cutting staff, with the total number of employees losing their jobs reaching almost 1,000.

According to The Telegraph, the San Francisco-based robotic pizza-maker Zume will cut its workforce in half, laying off at least 360 people. The start-up, once valued at $2bn (£1.5bn, €1.8bn), will stop making deliveries and focus on sustainable packaging.

Another start-up, car-sharing company Getaround based in Silicon Valley, will cut 150 employees. The company linked the layoffs to the financial problems that SoftBank has recently faced.

Moreover, Latin American delivery start-up Rappi, also backed by the Japanese conglomerate that invested more than $1bn in it, will also cut 6 per cent of jobs. As Rappi employs more than 5,000 people, according to Reuters, the cuts could affect at least 300 staff.

SoftBank's financial troubles are likely linked with the recent attempt to bail out one of the major companies in its portfolio, WeWork. The workspace provider was forced to cancel its IPO last autumn as investors doubted its market valuation.

SoftBank said it would launch a $9.5bn bailout of WeWork to take over the company. However, the plan stalled because the Japanese technology conglomerate’s attempt to secure $3bn from Japan’s three biggest banks has failed.

Moreover, SoftBank is facing financial turmoil as its other major project, Uber, is facing visible losses. The conglomerate invested around $7.65bn into Uber in early 2018, but the ride-sharing app stock has been decreasing since then with no signs of recovery.

Uber founder, Travis Kalanick, is on the way to completely eliminate his stake in the company. As of December 2019, he sold more than $2.5bn in shares.

FURTHER READING: SoftBank's WeWork bailout stalls

FURTHER READING: SoftBank records $6.5bn losses following bad investments

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