-backed has reportedly shut down operations, according to an by Protocol’s Biz Carson.

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Brandless, a direct-to-consumer startup focused on food, beauty and personal care products, had announced it had raised a total of $292.5 million since its inception in 2016, according to .

led its last funding round, , which valued the company at $500 million, according to Crunchbase. At that time, our former editor-in-chief Alex Wilhelm pointed out the fact that it was “a huge check at a large cost in equity terms.” But it turns out that SoftBank had only provided��about $100 million upfront with a commitment to “fund around another $120 million if certain milestones were met. That final tranche never came,” according to Axios.

led its $35 million Series B in July 2017, a round that also included participation from NBA player , , and , among others.

Back in 2017, Crunchbase News sat down with ��, co-founder and CEO of ��to talk about how the company wanted to eliminate the inefficiency of the brand tax while changing the way people shop and live.

Background

It was bound to happen eventually. With all its misteps over the past couple of years, SoftBank was bound to have a portfolio company shut down.

The news that Brandless has shuttered is not entirely shocking, considering that last June, it got a new CEO amidst “turmoil” within the company, according to .

Looks like Brandless’ vision of $3 home goods just couldn’t keep up with the steep competition from rivals like . In fact, soon after it got that big cash infusion from SoftBank, the startup’s strategy seemed to change. According to TechCrunch’s Connie Laizos, in January 2019, the “company added baby and pet products to its stable of offerings, some of them at a ”

In a statement to , Brandless blamed a “fiercely competitive” retail market that was “unsustainable” for its business.

The news is the latest in a string of bad publicity for SoftBank. In January, we reported on how SoftBank-backed Colombian delivery unicorn had been hit with a trade secrets lawsuit. Also in January, we covered how two SoftBank-funded startups were in the news for either confirmed or rumored layoffs: Rappi had , according to Axios. And published an article that discount lodging provider reportedly was “firing thousands of staff across China and India.”

That followed pizza-making robot startup , also backed by SoftBank, laying off�� 53 percent of its employees.

SoftBank, a Japanese investment conglomerate, has been accused of overinflating valuations with its fat checks, and it’s not ending well for many companies. But the practice of investing too much, perhaps too soon, may be catching up with SoftBank. Earlier this year, that SoftBank is cutting its ties with startup investments, even after signing term sheets.

In fact, SoftBank’s heavy-handed check-writing is leading investors and startups alike to rethink sky-high valuations in favor of a��path to profitability.

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You’ve probably heard some of these stats, but let’s dwell on a few. About 8 percent of the world’s oil production is used to make plastic. Of that, about . Of that, some 18 billion pounds of plastic waste flows into the oceans every year.

It’s enough to make the author of a piece on sustainable packaging feel downright consumed with self-loathing for just downing a plastic bottle of water and a plastic-wrapped cookie. But we’re here to talk about startups.

Fortunately, while some writers aren’t doing their part, startups have been quite busy developing alternatives to plastic packaging and other environmentally damaging materials. Investors have been writing them some big checks as well.

A Crunchbase survey of funded companies in the sustainable packaging and materials space unearthed more than 20 () that have raised significant funding in the past three years.�� Collectively, they’ve raised more than $850 million, with most of the money coming in the past couple of years.

This is no paltry sum, so we thought it’d be instructive to take a look at where the money’s going, and what it might signify for the future of disposables.

Top Funding Recipients

There are at least seven recently-funded startups in the eco-packing space that have individually raised $20 million or more, per Crunchbase data. We chart out the top funding recipients below.

One unusual takeaway is that the most heavily funded company – – started out with a business model that had little to do with sustainable packaging. The Silicon Valley company was primarily focused on robot-enabled pizza prep and delivery when it raised a $375 million round from in late 2018. The company has since announced a sharp pivot into sustainable packaging a few months after acquiring fortuitously named startup .

Another observation from the list of top venture-backed startups is there’s no clear geographic hub for sustainable packaging. Well-funded companies in the space hail from multiple continents and are based in major tech hubs as well as cities not known as startup havens.

Why Now?

Sustainable packaging seems like one those startup spaces that should have really taken off a long time ago. After all, everyone knows plastic is wasteful and bad for the environment, and there are plenty of other materials we could use to package the endless things we buy.

But change hasn’t come easy. Disrupting entrenched supply and manufacturing chains, producing new materials and containers at scale, and asking people to pay a bit more for eco-friendlier packing are all challenging things to orchestrate.

Adding to the complexity is consumers’ high expectations of their packaging, notes , an adjunct partner at , who is focused on food supply chains. ������Ƶ are looking for containers that are resealable, microwaveable and keep food fresh.

“The consumer at this point will not sacrifice product convenience,” she said. “So the packaging needs not just to be sustainable, but also fulfill the convenience and conservation capabilities it has been fulfilling for years.”

But the space is getting a boost as more major retailers, eateries, and food and consumer products producers are increasing investment in and commitment to sustainable packaging. And it goes beyond small steps like the eco-friendly paper straw you get at Starbucks.

Big corporations stepping up their eco game include cereal giant , which in October that it aims to transition to 100 percent reusable, recyclable or compostable packaging by the end of 2025. Consumer products conglomerate , meanwhile, to halve its use of virgin plastic by that date. Even , known for its low-cost emphasis, has providing fully recyclable, reusable or compostable packaging for its private brand items. And the …

Exit Potential

Sustainable packaging isn’t a brand-new area, and entrepreneurial companies have been innovating in the space for a couple decades at this point. That means some of them have found their way into the arms of an acquirer, including most recently Pivot.

But for now the bulk of the exit activity remains ahead, particularly as incumbent packaging companies come under pressure from customers and governments to meet targets for lower-waste packaging.

As one sustainable packaging startup, , notes in its marketing materials: Packaging waste represents one-third of all municipal trash, costing local governments billions each year in disposal costs. Finding ways to cut back is a laudable environmental goal — but increasingly it’s looking like a wise financial decision as well.

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As (WeWork) stumbles towards an IPO at a price far under its final private valuation, its leading investor is considering working to remove its CEO. The possible reduction in the internal authority of , prior media darling and now international business pariah, is the biggest news of the weekend.

But there’s more going on at , a key WeWork backer, that I wanted to highlight. More precisely, it seems that the investment group has made some mispriced bets in recent years. Let’s talk valuations for a minute.

Down

The , observing that several SoftBank Vision Fund investments were either giving up gains or, in fact, losing money for their famous investor.

It appears that SoftBank CEO is underwater on his bet, and his various wagers into are losing altitude as well. The Journal goes on to note that the Vision Fund’s investment into has lost value as well, “potentially requiring [the deal] to be marked down.”

It’s not hard, therefore, to look at the most valuable Vision Fund deals and spy weakness. I want to extend the point today by reminding ourselves of a few other deals that the Vision Fund took part in that I reckon are also underwater.

To jog your memory, three Vision Fund deals quickly came to mind this morning when I tried to recall what felt like the group’s least conservative bets:

• $300 million from the Vision Fund. Wag provides pet walking services in urban environments.
• $375 million from the Vision Fund. Zume makes food on the go through robotic methods.
• $240 million led by the Vision Fund. Brandless offers low-cost goods at a flat price point through its own digital store.

Since then, , , and I never had much hope that was going to wind up being the near-term future.

Naturally, these are just a handful of deals from a huge investment bucket. There will be winners in the Vision Fund 1 — , , , perhaps — to offset other losses. But there are also some investments like WeWork and Zume that are more head-scratchers than wagers we understand.

What appears clear, however, is that a good chunk of the first Vision Fund’s deal makeup was either mispriced, fed too much capital, or both. That is not a recipe for success. But don’t trust your friendly local tech blogger. Listen to investor earlier this year:

I think the mentality of throwing money at companies and making them successful just doesn’t work. I’ve never seen real examples of just, you take money and you crown a winner. That’s the philosophy, which I don’t believe that works. I think that’s the whole history of Silicon Valley, is that these upstarts with very limited resources and a bunch of misfits have rearranged every single industry, and they’ve done it over and over again.

Capping it all off, the Vision Fund is a “Valuations Director.” 2019.

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