SoftBank Backed Construction Startup Katerra to Close
Posted on 06/02/2021
Katerra Inc., the modular manufacturer and prefab construction company, is closing down. Katerra was founded in 2015 and had raised around US$ 2 billion from investors that include Japan-based SoftBank Group Corporation. Katerra claims it may not have enough money to pay employee severance or PTO.
Katerra grew fast with cash infusions from the SoftBank Vision Fund. Other Katerra investors included Foxconn, DFJ, Greenoaks Capital, Soros Management Fund, and Singapore’s GIC Private Limited.
In 2018, issues started to surface at Katerra. SoftBank had also purchased stakes from early Katerra employees and executives in 2018. By 2019, Katerra started cutting jobs and ended up closing a factory in Phoenix.
In December 2020, SoftBank agreed to invest US$ 200 million to help steer Katerra away from bankruptcy. That deal gave SoftBank majority control of the company. Interestingly in that deal, Greensill Capital (now insolvent) agreed to cancel around US$ 435 million in debt owed by Katerra in exchange for a roughly 5% stake in the company. In May 2021, SoftBank founder Masayoshi Son named Katerra specifically as an investment where it had made mistakes, along with WeWork and Greensill.
