More details on an unusual story we told you about last month.

SoftBank could acquire as much as 45 percent of Wag, the dog-walking app startup that is in talks to accept $300 million in funding despite originally only seeking one third as much money.

Recode reported last month that Wag was pitching investors on a $100 million round of financing. But then, amid fundraising troubles, the Japanese giant SoftBank — which is on a funding rampage in the U.S. tech sector — and Wag entered talks to triple that.

The deal has not yet closed and could still fall apart. But the mere offer has been a hot topic in Silicon Valley, because it vividly shows how SoftBank has influenced fundraising outcomes in tech.

Now we’ve learned something even more unusual: The deal could give SoftBank and co-investors around 45 percent of the company, according to multiple sources familiar with the deal. The transaction values the dog-walking company at around $650 million when you include the $300 million in cash.

Typically a venture firm leading a round might acquire between 15 to 20 percent of a company. It is quite rare to see this type of ownership percentage in a venture-backed company, especially from a single investment round. And it’s another sign of how SoftBank — which is investing a mammoth $100 billion fund — is changing the rules here in Silicon Valley.

Wag serves as a marketplace for dog owners and dog walkers, but has encountered fierce competition from Rover, another venture-backed company that offers a similar service. The onerous terms of the deal suggest Wag does not have significant leverage in fundraising negotiations, perhaps a sign of troubled finances at the company.

SoftBank and Wag declined to comment.

SoftBank is the lead investor behind the $300 million, though other smaller investors could join the round. Wag had already received an $100 million investment offer from a top venture capital firm before SoftBank arrived, a person familiar with the conversations told Recode last December.

The company was valued at around $200 million just last April, according to PitchBook, meaning this would be the company’s second round of financing in just a year. Previous investors include Sherpa Capital and General Catalyst.

Recode – All Go to Source

Theodore Schleifer

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