- In March, Tina Sharkey stepped down as CEO of Brandless, the direct-to-consumer retailer of “unbranded” household items. Brandless recently brought in former Walmart CEO John Rittenhouse to replace Sharkey.
- New reporting from The Information reveals the move was partly a response to tension with the company’s largest investor SoftBank, which wanted Brandless to turn a profit.
- SoftBank invested $200 million in Brandless in 2018 through its Vision Fund — a sum that would be paid out in installments.
- So far, Brandless has only received one of these installments, and a person with direct knowledge of the matter told The Information that SoftBank may not pay the final $100 million if the company doesn’t meet certain financial targets.
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Brandless, a fast-growing e-commerce startup valued at $500 million, is in an increasingly rocky relationship with SoftBank, its biggest backer, according to a report published by The Information on Wednesday.
The friction is apparently due to the company’s finances, with SoftBank pushing for Brandless to clamp down on spending and to turn a profit, The Information reports. The situation has resulted in the departure of several executives, and a change in CEO.
While CEO Tina Sharkey wrote in March that she was stepping down from the job to have a “more focused role” at the company, the change was partly due to growing tension with SoftBank, according to the Information, which cites a source familiar with the situation.
In 2018, SoftBank’s Vision Fund invested $200 million in Brandless, bringing the company’s valuation to $500 million, according to The Information. The deal gave SoftBank a 40% stake in the company. SoftBank was going to pay out the investment in installments, but Brandless is said to have received just the first of these installments so far.
Now, SoftBank investors have said they may not pay the remaining balance of $100 million if Brandless doesn’t meet financial targets, according to an anonymous source who spoke to The Information. But The Information also cited a different source who said the money is simply being delayed, by unanimous vote of the Brandless board of directors, because the company has sufficient capital.
Whatever the case, the fraying relationship is worth paying attention to as SoftBank has become one of the biggest investors in Silicon Valley tech startups in recent years, with large stakes in dozens of companies including Uber, Slack SoFi.
Brandless, which was founded in 2012, sells household goods directly to consumers. A representative at SoftBank could not immediately be reached for comment.
A Brandless spokeseperson sent Business Insider a statement that said the company “is well capitalized to continue innovating across multiple wellness verticals and accelerate our distribution into new channels.”
The statement also said that new CEO John Rittenhouse “has decades of ecommerce and retail experience from senior leadership roles at Walmart, Target, LVMH and Moda Operandi, and has a deep understanding of the complexities of operating a CPG business.”
The recent upheaval at Brandless has prompted several other executives to leave, including COO Meghan Laffey, head of business development Lee Anne Grant, and head of supply chain and operations Dave McClure, according to The Information.
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