The bad news just keeps coming for SoftBank.
In the past 24 hours alone, two more SoftBank-funded startups are in the news for either confirmed or rumored layoffs: Colombian on-demand delivery unicorn Rappi this week laid off hundreds of employees, according to Axios. And Bloomberg published this morning that discount lodging provider Oyo Hotels reportedly “is firing thousands of staff across China and India.”
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Rappi told Brazil Journal that it would be letting go of about 6 percent of its workforce, over 300 people. The job cuts are taking place just over eight months after Rappi confirmed an investment of “up to $1 billion” from SoftBank. The raise, which we covered here, was done at a pre-money valuation of $2.5 billion, according to a Bloomberg report.
Since its inception in 2015, Rappi raised a total of about $1.4 billion—including a $200 million Series D in August 2018 that took it to unicorn status, according to the startup’s Crunchbase profile. Yuri Milner’s DST Global led that round, which included participation from existing investors including Sequoia Capital and Andreessen Horowitz (a16z).
Meanwhile, Oyo Hotels is reportedly laying off 5 percent of its 12,000 “employees in China partly due to non-performance” and 12 percent of its 10,000 staff in India, according to Bloomberg, which cited unnamed sources. It also plans to cut another 1,200 jobs in India over the next three to four months, the publication said.
This news isn’t entirely shocking, though, when you consider what our former EIC Alex Wilhelm described last October as Oyo’s “complicated financing efforts.” The company has raised a staggering $3.2 billion in venture and debt financing since it was founded in 2012, according to Crunchbase data.
The SoftBank Curse?
All this negative news comes on the heels of pizza-making robot startup Zume laying off 80 percent of its employees, as first reported by Business Insider and covered more in-depth by our own Natasha Mascarenhas.
It also follows a tumultuous year for SoftBank, which has seen its share of negative headlines. The Japanese investment conglomerate has been accused of overinflating valuations with its fat checks, and it’s not ending well for many companies (WeWork and Uber, we’re looking at you.) But the practice of investing too much, perhaps too soon, may be catching up with SoftBank. Earlier this week, Axios also reported that SoftBank is cutting its ties with startup investments, even after signing term sheets. That’s not good.
Illustration: Li-Anne Dias