SoftBank is giving up on the dog-walking startup Wag after investing $300 million two years ago, The Wall Street Journal (WSJ) reported on Monday (Dec. 9). Wag CEO Garrett Smallwood — who was hired just last month — told employees that the company was “amicably parting ways with SoftBank,” said in an email obtained by CNN Business.
SoftBank is selling its 50 percent stake back to Wag, and will no longer have representation on its board, Smallwood said. Wag has proceeded with a layoff of dozens of employees, and is downsizing much of its remaining workforce, according to an internal memo viewed by WSJ.
Having been considered to be the next big thing in tech, Wag highlights the downfall of a startup that “once appeared poised to be … powered by an on-demand business model similar to companies like Uber.”
The failed Wag investment is the “latest shadow cast over” of SoftBank, and its nearly $100 billion Vision Fund. Wag struggled to keep up with the competition, despite SoftBank’s backing. Before deciding to sell its Wag stake, SoftBank looked into different options for the startup, including a sale to a strategic investor, a source familiar with the matter told WSJ.
A filing with the California Employment Development Department (EDD) on Monday showed that Wag is shuttering its West Hollywood office, affecting 90 staffers. The company also has offices in the Bay Area and Phoenix.
Smallwood referred to the layoffs as an “extremely painful and difficult step,” however, “it was also an important one for our future.”
Last month, SoftBank extended a lifeline of $8 billion to WeWork, committing $5 billion in new financing, as well as issuing a tender offer for an additional $3 billion in buy-backs for shareholders. The firm would also speed up a commitment to put $1.5 billion into the company. SoftBank CEO Masayoshi Son called his company’s decision to save WeWork “an exception” that won’t happen again.