SoftBank is suing portfolio company IRL after it admitted 95% of its users were fake. VCs are stressing the need for ‘uncomfortable’ due diligence::undefined
How is it uncomfortable verifying how many customers you have? As someone who works in the legal sector I am staggered by how many anyone nebulous software companies are bought without the buyer conducting minimal due diligence like a review of the top 20 customers.
I’ll be blunt: if a large bank is stupid enough to invest money in a company that’s basically vaporware, and they invest because they were far too lazy to do any real due diligence, that’s on the bank.
SoftBank is astoundingly bad at this. This is the same company that acquired Sprint, among other bad decisions. Last fall they were happy that they only lost $6 Billion in the quarter because they’d lost $10B the previous quarter. The financial system is really fucked up when companies like this just stay in business despite this type of incompetence.
This is literally the GoJo plot in Succession lmao
That’s because it keeps happening in real life
“If you’re a teen in America, then you probably are familiar with a messaging app called IRL. The rest of you likely are not—aside from some big name tech investors keen to shower the startup with a large new funding round.”
Even the journalist believed the lie. Nobody checked with the teens!
