SoftBank-backed Katerra reportedly shutting down

2 Jun 2021372 Views

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The company had raised more than $2bn from investors and had been previously rescued from the brink of bankruptcy.

Katerra, the embattled construction-tech start-up backed by SoftBank, is shutting down its operations, according to media reports.

The Information first reported on Tuesday (1 June) that the company informed staff that it was closing down, while Bloomberg cited people familiar with the plans in its report.

The Californian company has raised more than $2bn from investors. One of its big backers is Japanese tech investment giant SoftBank, which has invested about $1bn. The company was once reportedly valued at $4bn.

Katerra was developing ways to use modular technology to cheaply design and construct buildings, but its business hit a number of snags.

Last June it laid off around 400 employees during the toughest days of the pandemic when the construction industry effectively ground to a halt. But problems were emerging pre-pandemic. The company let 200 people go in December 2019 and shut one of its US factories while it struggled to deliver on construction projects it was involved in.

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In a bid to avoid bankruptcy, SoftBank shored up the company at the tail end of 2020 with a $200m lifeline and took a majority stake.

The company had projects in play in the US, India and Saudi Arabia, and last year claimed that it had around 8,000 employees.

The Information reported that the company, which has not yet commented publicly, told employees it was unable to pay severance packages.

Katerra’s struggles are a fresh blight on the portfolio of SoftBank, which has been hit by a number of major falls from grace. Most infamously, WeWork was bailed out by the firm after its disastrous attempt at an IPO. The company has since been restructured with a great deal of cost cutting and is primed for going public through a SPAC.

More recently, financial services firm Greensill Capital, also backed by SoftBank, collapsed and caused a political scandal in the UK in the process.

Jonathan Keane is a freelance business and technology journalist based in Dublin

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