Technology-driven offsite construction company Katerra has been bailed out by Japanese investment conglomerate SoftBank. The approved recapitalization will strengthen Katerra’s balance sheet by eliminating significant debt and providing $200 million of new funding, principally from SoftBank Vision Fund 1.
According to the Wall Street Journal, this funding is in addition to the roughly $2 billion SoftBank has already invested in Katerra. “Under the plan, the Japanese investment firm’s stake in Katerra will grow to give it a majority stake, while other investors will see their stakes severely diluted,” the Wall Street Journal reported.
In an e-mail to employees, Katerra’s CEO Paal Kibsgaard wrote “…along Katerra’s journey we have also experienced challenges and missteps. As with many startups and disruptors, Katerra pursued a path of lightning-speed growth, expanding rapidly into new geographies and business lines with a cost-intensive program that included high capital investments and R&D spend. As a result, and despite the positive intentions, Katerra at times became overcommitted and spread itself too thin. Accordingly, the company spent substantial amounts of investor capital while establishing and growing numerous businesses in parallel—ultimately more than we could fully develop and maintain all at once within this very capital-intensive industry.”
“The decision to recapitalize follows a thorough review of options available to us to enhance our financial strength and ensure Katerra’s ability to continue to pursue our goal of transforming the construction industry,” said Kibsgaard. “Since taking over as CEO in July 2020, my team and I have been hard at work reducing costs and refocusing on our core businesses. We believe that this strategic and operational realignment, supported by SoftBank, is in the best interest of all stakeholders and will provide Katerra with the financial flexibility and resources needed to invest in areas that have the most promising growth trajectory.”