SoftBank invested $100M in FTX – an epitome of reluctant investment
In a Twitter post the former COO said FOMO was a reason for their investment
As additional details regarding the events that led to FTX’s bankruptcy and unexpected collapse become visible, investors in the cryptocurrency exchange are also being attentively monitored.
Many people are particularly curious as to how so many reputable investment firms could invest a total of $2 billion with what seems to be so little due diligence.
The well-known Japanese investment conglomerate, SoftBank is one of several firms that backed FTX when the company completed a $400 million funding round in January, valued at an amazing $32 billion. Recently, SoftBank said that it had contributed little under $100 million to its Vision Fund 2. That stake has now been written down to zero, with SoftBank claiming that it would not face a large discount in the value of its holding.
This isn’t the first time SoftBank has made a terrible mistake in investment. WeWork received at least $18.5 billion from them along with co-founder Adam Neumann.
Katerra, a construction technology company, also received funding from SoftBank, used up its $2 billion in capital before going out of business. They also gave a $100 million loan to the blood testing business Theranos.
Shortly after Sequoia Capital lowered the value of its interest in FTX to zero, SoftBank announced their investment in the company. This stake accounted for a modest percentage of Sequoia’s capital but it was among the most significant unrealised gains in the venture firm’s 50 year history.
The New York Times also reported that Pantera Capital and Galois were the latest hedge firms to acknowledge losses tied to FTX, $30 million and $40 million.
On FTX’s lengthy list of investors are more firms like NEA, IVP, Iconiq Capital, Third Point Ventures, Tiger Global, Altimeter Capital Management, Lux Capital, Mayfield, Insight Partners, Lightspeed Venture Partners, Ribbit Capital, Temasek Holdings, BlackRock, and Thoma Bravo.
