In the past few days, 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 with rumours that some of its brand offices have closed. Meanwhile, discount lodging provider Oyo Hotels reportedly is firing thousands of staff across China and India while also having many of its branch offices closed as well.
A spokesman from Rappi told Thailand Startup
News that it would be letting go of about 7 percent of its workforce, over 350 people. The job cuts are taking place just over eight months after Rappi confirmed an investment of “up to US$1 billion” from SoftBank. The that funding was done at a pre-money valuation of US$2.5 billion.
From its inception in 2015, Rappi raised a total of about US$1.4 billion, including a $200 million Series D in August 2018 that took it to unicorn status, according to the startup’s profile. Yuri Milner’s DST Global led that round, which included participation from existing investors including Sequoia Capital and Andreessen Horowitz.
On the other end of the world, 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 a spokesman, who wished to remain anonymous. It also plans to cut another 1,200 jobs in India over the next three to four months.
This negative news isn’t entirely shocking, though, when you consider what many media outlets 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 its corporate data.
All this bad news comes on the heels of pizza-making robot startup Zume laying off 80 percent of its employees, as first reported by certain media a fortnight ago.
The past year, 2019 has also been 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, certain media also reported that SoftBank is cutting its ties with startup investments, even after signing term sheets. That’s not good sign of things in the whole startup