SoftBank’s Startup Bookkeeping Draws Scrutiny

In some cases, SoftBank’s involvement in multiple funding rounds helped drive up startup valuations that resulted in paper profits for Son’s company

The WeWork fiasco raises questions about such numbers. The co-working startup’s valuation crested at $47 billion this year with SoftBank’s investment, then plummeted to $7.8 billion in a bailout engineered by Son. WeWork is slashing jobs and scaling back operations.

“WeWork is not just a mistake, it is a signal of weakness in the whole model,” said Aswath Damodaran, a professor of finance at New York University’s Stern School of Business, who has written four books on valuing businesses. “If you screwed up that valuation so badly, what about all of the other companies in your portfolio?”

SoftBank said WeWork is an exception rather than a symptom of broader problems, and it has learned from the experience.

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