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OYO recently raised billion to fund expansion all over the globe. This round of funding reportedly valued the company at billion—a valuation that is more than twice that of MakeMyTrip’s own current valuation of .4 billion.But more importantly, OYO represents multinational conglomerate SoftBank and its 0-billion Vision Fund. In nearly half of the deals that SoftBank has participated in, it has individually committed a billion or more, racking up a total of billion invested in a single year. This is nearly the same as what the entire US VC industry invests in a single year across thousands of startups. The standard funding playbook is for a VC to make a small “exploratory” bet in a startup and progressively double down with increasing amounts in follow-on rounds as and when the startup finds product-market-fit and requires more capital to grow. On the other hand, SoftBank’s smallest deals are in the 0-million range and the largest are typically in the billion-dollar range. Most, if not all, of these startups are far from reaching a stage where capital is the constraint. Instead, they are at points where technological challenges need to be overcome and unit economics need to be established. But by force-feeding capital, SoftBank is putting these startups on a grow-at-all-costs trajectory prematurely, and in the process, addicting them to capital.
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