The Japanese company SoftBank admitted to having been duped by an IRL social network, which claimed to be the new Facebook, when it was populated by robots. Problem, she invested 150 million dollars in the company.
It is particularly difficult for SoftBank to deny failure. The Japanese conglomerate, which owns stakes in Alibaba, Sprint, ARM and Boston Dynamics, did not really have a hollow nose by investing, through its Vision Fund, 150 million dollars in IRL (In Real Life ). The interest turned out to be a deception, with as many as 95% of users being completely fictitious bots on a social network that claimed it could compete with Facebook.
An attractive investment for Softbank, which turns into a fiasco
Attracted by the great promise in 2021, SoftBank’s investment fund helped value this American company at $1.2 billion. But doubts quickly emerged about the inflated user figures of the IRL application. An audit then revealed that more than 9 out of 10 members were not humans. Quite logically, Softbank took legal action against the founder of the social network, Abraham Shafi.
This XXL failure obviously calls into question the almost legendary investor flair of Masayoshi Son, the founder of SoftBank, who already had to digest the WeWork fiasco as recently as November, which also cost him 11 .5 billion dollars.
And now the IRL scandal breaks out, which once again shakes Masayoshi Son’s credibility. The investment fund in question, Vision Fund 2, was created in 2019 following the success of its V1. But the first city lost 1.7 billion dollars in the last quarter, which is weighing down investor morale.
Softbank dad Masayoshi Son’s impulsive investments called into question
Softbank filed a complaint against IRL and its founder for fraud. But opposite, Abraham Shafi remains impassive and defends the legitimacy of his ghost application. The judges will have to shed light on the responsibility of both parties. The testimonies of certain former employees, who explain that no one had ever heard of IRL (while the social network boasted of having attracted 25% of American teenagers), in any case do not do Abraham’s business Shafi.
Beyond the fact of having been cheated, it is above all the way in which the investment was validated which is of concern. Less than 48 hours after meeting IRL founder Masayoshi Son agreed to invest. The same thing happened with WeWork in 2017, although the coworking company survived.
The CEO’s bold and impulsive investments seem to be a departure from his previous successes, such as the more than successful Alibaba bet. These are all choices which, today, call into question the investment sagacity of the businessman.
Source : Le Figaro
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