Yesterday, WeWork announced that it closed a $6 billion investment from Softbank and rebranded to “The We Company.” According to the company’s blog post, the brand change is meant to bring “all of [its] business ambitions together to operate in service of how we work, how we live, and how we grow.” The company is now valued at $47 billion, post-money.
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As we have mentioned in the past, WeWork’s long term vision is to encompass all of life’s activities from education to habitation. As our guest author put it last March “it looks like the company wants to own an entire vertically integrated yuppie lifestyle,” and its acquisitions, global ambitions, and new projects underscore that vision.
But it turns out that the pursuit of that dream comes with a hefty price tag, and as we and many others have covered (multiple times), the company is a big money loser, pinning growth over profitability as its driving business model.
But with investors willing to bet that WeWork’s growth goals will eventually transform into capital gains, the company has been generously funded during its lifetime, banking almost $13 billion since its inception. Take a look at its most recent fundraising activity:
However, in coworking, WeWork has a host of competitors, including China-based UCommune, which recently banked $200 million for its own global expansion efforts, and other companies finding their niche in the flexible workspace industry. In an increasingly unpredictable economic climate, spending with no clear path to profitability in the works may not be the best look when talking to investors, even heavy-handed ones like Softbank. Per the multiple reports that surfaced prior to WeWork’s official announcement, Softbank had reportedly been planning on investing $16 billion in the company but scaled that back.
Still, that’s $2 billion more to put the idea to work and prove its naysayers wrong.
Illustration Credit: Li-Anne Dias