SoftBank Group Corp.’s Vision Fund is selling back its nearly 50% stake in Wag Labs Inc. as the Los Angeles dog-walking start-up cuts staff.
Wag will regain control of SoftBank’s two board seats as part of the agreement, according to a memo Wag sent to staff Monday. The company didn’t disclose terms of the deal or the number of jobs set to be eliminated.
A spokeswoman for the Vision Fund confirmed the stock sale but declined to comment further. A spokesman for Wag declined to comment. The news was earlier reported by the Wall Street Journal.
The Vision Fund had invested $300 million in the business early last year before a reckoning came for Uber Technologies Inc., WeWork and other unprofitable companies backed by SoftBank. Wag’s chief executive left last month and was replaced by the company’s 29-year-old vice president of product and partnerships, Garrett Smallwood.
Even after a cash infusion and aggressive spending, Wag struggled to compete with Rover.com. Wag’s position worsened once it cut back on promotions for new customers. Wag had been seeking to sell itself as recently as October, in a deal that was expected to value the business at less than the amount SoftBank paid for its stake, people familiar with the situation said recently. Wag had about $100 million in cash earlier this year, one of the people said.
This week’s moves will help Wag “refocus on delivering sustainable growth,” Smallwood wrote in his memo. The company isn’t looking to buy back shares from other investors, a person familiar with the matter said Monday. Earlier venture investors include General Catalyst, Sherpa Capital and Slow Ventures.