How VCs Can Cripple A Promising Category; Time To Build Something New – AdExchanger

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VC You On The Other Side

The food delivery app Gopuff is looking for a $300 million “cash cushion,” The Wall Street Journal reports, to help bridge tough economic times and diminishing returns in the superfast food delivery startup category.

SoftBank, a gigantic Japanese fund and preexisting Gopuff investor, is setting up a loan.

The delivery category in general and SoftBank in particular are examples of how VC dollars can lead to pyrrhic victories without lasting winners.

SoftBank didn’t just bet big on Gopuff. It went all-in on the category, backing Uber and Uber Eats, as well as food delivery startups across the globe, including Gorillas, JOKR, Swiggy and Loggi.

Diversification makes sense for SoftBank. But when companies like Gorillas, JOKR and Gopuff become flush with hundreds of millions of dollars in VC cash – and take on a growth-at-any-cost mindset – they force each other to operate unsustainably…

Read Full Story: https://www.adexchanger.com/ad-exchange-news/wednesday-31082022/

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