The timeline for the backing out is around the WeWork IPO debacle. This makes a lot of sense --- in reaction to that, maybe they have new standards for investing, maybe they don't even know what the new standards are yet, maybe they don't even know when the new standards will be available, (almost) all the deals in progress are going to be screwed.

This kind of stuff is more common with corporate acquirers than established VC, I would expect, but it's kind of part of the game. If you have leverage as the start up, you demand short timeframes and meaningful deposits to keep the investors on task; if you don't have leverage, you get a bad deal (6-month exclusivity is crazy).

Nah, where there’s smoke there’s fire.

They’re fucked because their LPs are losing their minds, and as a result everything changed for them and they’re bailing on deals.

What's an LP in this context?

LP stands for Limited Partner. They are the people that actually provided the funding, but they have an arrangement where they have severely limited control (basically none) as to how the money is managed once it's part of the fund. The reason for this is because they are trusting the VC firm to actually invest their money wisely, and the VC firm needs to able to do that without constant interference from the investors.

https://www.thebusinessofvc.com/blog/limited-partners-101

All true. I suspect in this case Softbank was depending on the Vision Fund LPs to come back for round 2, but the WeWork fiasco scared them off, and now WeWork is in panic mode.

Limited Partner, the people who out up money in VC funds for the General Partner to invest/manage. iirc though LPs cant have an actual say in investment/strategy or else they risk losing the "Limited" status.

LP is short for Limited Partner

> While it’s legal, it is not “normal” for VC funds to be backing out of a half dozen deals at the same time.

Except that softbank vision fund is not a "normal" VC fund. They many times larger than the largest VC fund.

https://en.wikipedia.org/wiki/List_of_venture_capital_firms

Softbank has $100 billion in assets. The 2nd closest VC fund has $17 billion. Proportionally, softbank backing out of 6 deals is like the 2nd VC fund backing out of 1 deal.

>reputation suicide for any legitimate VC.

A huge chunk of this fund is money from Saudi Arabia. You think reputation matters, or that startup founders are going to turn away their money?

Yes, 100%. Nobody wants to risk their business on empty promises from a VC with a poor track record, even if they're offering inflated valuations.

>Nobody wants to risk their business

The business most of these startups are in is burning venture capital.

That only works if you can actually get that money. If you don't trust a VC to actually give you the money they promised it's wiser to go with one you can.

Nobody is walking away from SoftBank, and they don't have a poor track record.

They're a major upstart, and will be around probably for quite some time. At least until a crash, probably longer.

There are very few players in town willing and able to bankroll what used to be IPO level funding. It's a new category of investing they've created, and they are still the leader.