SoftBank May Tighten the Reins on Start-Up Founders
SoftBank may have a plan to invest more safely
After the near-collapse of the office space company WeWork that it’s heavily invested in, SoftBank may be set to clamp down on the freedom afforded to the founders of companies it backs through its Vision Fund.
It’s not just WeWork causing headaches. Other investments made by SoftBank’s nearly $100 billion Vision Fund are also causing problems. “After a sizable bet on online car-lessor Fair, that company is struggling to stay afloat,” the WSJ reports. And the dog-walking app Wag “is for sale, people with knowledge of the companies say.”
Masayoshi Son, the SoftBank C.E.O., defended the Vision Fund’s approach at the Future Investment Initiative conference in Riyadh, Saudi Arabia, last month, the FT reports. He said it would continue offering capital to start-ups so they could “grow much bigger and quicker.” He added: “We identify the entrepreneurs who have the greatest vision to solve the unsolvable.”
But SoftBank may impose new standards to keep founders in check, according to another report by the FT:
• “The Tokyo-based group is expected to outline tougher governance standards and restrictions on dual-class share structures on Wednesday.”
• “The new governance standards will apply to future investments made by SoftBank.”
• “Its Saudi Arabia-backed Vision Fund is in discussions about how it can adopt some or all of these measures.”
“The guidelines that SoftBank are now introducing echo the steps WeWork was forced to take to address investor anxiety in the run-up to its IPO, as well as after it received a $9.5bn rescue package from its Japanese backer to avert bankruptcy,” the FT notes.