Market Overview

SoftBank-Backed Online Store Brandless Shutting Down

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SoftBank-Backed Online Store Brandless Shutting Down

Brandless, an online store backed by SoftBank Group Corporation (OTC: SFTBY) that sold household goods for $3 each is shutting down.

What Happened

Brandless, based out of San Francisco, will wind down operations. The company is the first SoftBank Vision Fund-backed startup that has shut shop as it lays off 70 people. It has been reported that ten employees would stay on board to process any remaining orders and “evaluate any acquisition offers.”

The direct-to-consumer company, which began operations in 2017, released a statement on their website, “While the Brandless team set a new bar for the types of products consumers deserve and at prices they expect, the fiercely competitive direct-to-consumer market has proven unsustainable for our current business model.”

Why It Matters

Brandless was funded by SoftBank’s $100 billion vision fund out of $240 million in total fundings. TechCrunch, citing a source close to the company, revealed that less than half of that amount actually made it to the company. The fund has backed or purchased numerous startups like Slack, Uber, Zume, Wag, and WeWork. 

It has invested over $14 billion into WeWork, a co-working space startup whose IPO failed. The startup suffered from disastrous leadership of its former CEO and co-founder Adam Neumann who engaged in illegal practices such as charging the company $6 million for the “We” trademark and borrowing from the company at little to no interest. 

SoftBank CEO Masayoshi Son’s judgment was questioned in the past, and he has had to apologize for his track record. Son expressed his regrets saying, “I include myself when I say it is not the time for Japanese entrepreneurs to be making excuses.”

Price Action 

SoftBank shares traded at $46.78 at press time in Tokyo on Tuesday, higher by 1.50%. The OTC shares closed at $23.54 higher, with a 1.64% increase on Monday.

Photo Credit: Courtesy of Brandless 

 

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