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.

What is your sentiment on UBER?

22.21
Bullish
or
Bearish
Vote to see community's results!

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.

FURTHER READING: Softbank records loss over $6bn

FURTHER READING: Softbank to create $30bn tech giant with merger

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image