PitchBook News - WeWork losses pile up at SoftBank

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PitchBook

The Daily Pitch: VC

May 1, 2020

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Today's Top Stories

Quantitative Perspectives: US private equity during economic turmoil

The US private equity industry continues to grapple with how to properly navigate this unprecedented period of economic distress. In the first report of its kind, PitchBook analysts provide a fully quantitative retrospective of the US PE landscape during the previous recession, as well as a forward-looking assessment of what we expect to occur in the coming one. Key points include:

Private equity deal flow is forecast to experience material declines, driven by the impact of economic deterioration on credit spreads

Portfolio company bankruptcies are expected to tick up, as cash flow to service debt dries up in the short term

Smaller managers may fail, as they are less equipped to manage distressed portfolios and lack the track records to attract new LP commitments

read it now

More coronavirus news: Continuing coverage from PitchBook

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SoftBank has more bad news for shareholders

(Tomohiro Ohsumi/Getty Images)

In light of steeper losses from its WeWork investment, SoftBank has again revised its annual guidance for the latest fiscal year.

The Japanese tech giant now expects a net loss of 900 billion yen (about $8.4 billion)—150 billion yen more than it announced over two weeks ago. SoftBank said its investment in WeWork, as well as its loan commitment and financial guarantee for the co-working company, was responsible for about 700 billion yen in losses.

The new guidance follows an announcement in mid-April, when SoftBank told investors it expects the value of its Vision Fund portfolio to drop 1.8 trillion yen. Earlier this month, WeWork sued SoftBank, its largest investor, for backing away from a $3 billion tender offer that SoftBank said would primarily benefit founder Adam Neumann and fellow investor Benchmark.

Many SoftBank-backed companies showed signs that they were struggling before the coronavirus pandemic; the crisis has only exacerbated those problems. In recent months, real estate tech startups Opendoor and Compass, construction tech provider Katerra and restaurant robot-maker Zume have each reportedly laid off hundreds of employees. And internet satellite company OneWeb has filed for Chapter 11 protection.

Related read: Why SoftBank is parceling off its most prized possession

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Andreessen Horowitz raises $515M crypto fund

Andreessen Horowitz has raised $515 million for its second crypto fund, a sign the firm is bullish on the application of blockchain across a variety of industries. The vehicle will focus on payment blockchain that uses cryptocurrencies as "the bearer instrument" instead of depending on bank accounts to transfer digital payments.

The fund, co-led by a16z general partners Chris Dixon and Katie Haun, will also focus on decentralized finance startups using open-source software tools built on blockchain to provide financial services like lending and insurance.

The VC stalwart has invested in several crypto companies such as Ripple and Coinbase; it launched its debut crypto fund with $350 million in 2018.

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Ask PitchBook

Wondering how the pandemic is affecting your segment of the private markets? Looking for an explanation of which companies will benefit from government relief programs? Curious about what's driving a recent trend you've noticed?

Send us an email at press@pitchbook.com, and the news team will track down the answers you're seeking.

Thanks to all those who submitted questions for our first Ask PitchBook article, which explored distressed-debt investing.

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Will remote startups transform the economy?

(Westend61/Getty Images)

Practically every tech startup has shifted to working from home in recent weeks, forcing founders and investors alike to rethink the value of telework. The COVID-19 pandemic could be setting the stage for a new era of fully remote venture-backed startups operating without central offices.

With fully remote business models being put to the test, PitchBook's latest research note examines how such a trend could serve as a model for growth, innovation and disruption over the next decade:

read it now

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Recommended Reads

An economic catastrophe may be sweeping the globe. But, as always, a few billionaires are winning. [The New York Times]

Starting a new job is hard. Starting a new job during a pandemic is even harder. [Bloomberg]

Should VC-backed startups be eligible for coronavirus relief loans from the US government? For some, it seems to be a question with no good answer. [Fast Company]

Since yesterday, the PitchBook Platform added:

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Quick Takes


	The Daily Benchmark
	2014 Vintage Global Buyout Funds
	VC Deals
	Pivot Bio picks up $100M
	Design tech startup Figma takes in $50M from a16z
	Otonomo drives off with $46M
	Portfolio Companies
	Procore to delay IPO, complete funding round
	SoftBank-backed Grab proposes no-pay leave to workers

The Daily Benchmark

2014 Vintage Global Buyout Funds

Median IRR

17.00%

Top Quartile IRR Hurdle Rate

24.00%

1.45x

Median TVPI

Select top performers

Nautic Partners VII

Consonance Private Equity

BVIP Fund VIII

*IRR: net of fees

78 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

Pivot Bio picks up $100M

Pivot Bio has raised a $100 million Series C co-led by Breakthrough Energy Ventures and Temasek, with participation from DCVC. The agtech startup offers microbial nitrogen technology to increase crop yield.

View round

View 4 competitors »

Design tech startup Figma takes in $50M from a16z

Design software maker Figma has raised $50 million in a Series D led by Andreessen Horowitz. Investors like Index, Greylock Partners and Sequoia also funded the round for the company, which makes tools for UI, UX and other design applications. San Francisco-based Figma had been seeking the funding at a $2 billion valuation, Forbes reported in April.

Additional Investors:

Founders Fund, Kleiner Perkins, Durable Capital Partners

View round

View 33 competitors »

Otonomo drives off with $46M

Otonomo has raised a $46 million Series C from Bessemer Venture Partners, SK Holdings, Avis Budget and Alliance Ventures. The Israeli company is the developer of a transportation platform that provides information related to traffic, parking, fueling, predictive maintenance and other automotive data points. Otonomo has raised more than $80 million in total VC funding, and was valued at $135 million in 2017, according to a PitchBook estimate.

View round

View 8 competitors »

Portfolio Companies

Procore to delay IPO, complete funding round

Procore Technologies has decided to postpone its IPO and complete a private funding round, according to Bloomberg. The construction software provider has reportedly raised more than $150 million from investors including D1 Capital Partners at a valuation of some $5 billion. Procore filed for an IPO in February, and has received prior backing from Tiger Global and Dragoneer Investment Group, among others.

View details

View 38 competitors »

SoftBank-backed Grab proposes no-pay leave to workers

Grab, a ridehailing startup that operates in Southeast Asia, has asked its workers to go on voluntary no-pay leave or cut their work hours, according to Bloomberg. The Singapore-based company has given their workers these options to help avoid layoffs. Backed by investors such as SoftBank, MUFG and Alibaba, the startup has about 7,000 employees and is said to be valued at nearly $15 billion.

View details

View 38 competitors »

Chart of the Day

"VC-to-PE buyouts comprise over 4% of all buyouts, whereas PE take-privates (formerly VC-backed and otherwise) account for 0.97%, a reversal from the past. We expect to see a continuation of this trend going forward."

Source: PitchBook analyst note on VC-to-PE buyouts