Weeks after filing its S-1, The We Company (previously known as WeWork) has acquired a smaller co-working company, Spacious. WeWork declined to comment on the price of the acquisition.
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The deal marks WeWork’s “next step” in building out its on-demand workspace push. With Spacious, employees and startups can rent a room by the minute or hour. According to its Crunchbase profile, the company “reimagines how to use urban space more efficiently.” In a press release, WeWork chief product officer Chris Hill said WeWork will tap into that operational expertise and real estate.
The New York startup was founded in 2016 by CEO Preston Pesek, and at the time of acquisition, had $9.1 million in known venture capital under its belt. WeWork declined to comment on whether all employees of Spacious will stay on.
WeWork scooping up a smaller startup isn’t surprising, even if the timing is. It has acquired 17 companies so far, according to its Crunchbase profile. Its most recent preceding acquisition of the startup SpaceIQ was announced less than a month ago.
But acquiring another co-working space company is a change of pace for WeWork, which counts software companies like Euclid and Teem as many of its recent acquisitions. However, most of the software companies WeWork has acquired have functions related to real estate (room booking software, physical space analytics, etc.).
The Bigger Picture
The We Company filed its S-1 with the Securities and Exchange Commission earlier this month, which Crunchbase News broke down. The cowering company grew its revenue from $436.1 million in 2016 to $1.82 billion in 2018, according to its filing. Turning to deficits, it reported a $1.69 billion operating loss in 2018, up from $931.8 million in 2017 and $396.3 million in 2016.
As a private company, the unicorn has raised more than $12 billion in equity, debt, and secondary financing. That’s a lot of money for a single startup, giving it the ability to acquire two companies within one month.
While it’s uncommon to be able to swing that, another startup, also preparing to go public, has had quite the investment appetite. According to Crunchbase, Airbnb has bought 21 companies to date, and its most recent acquisition was announced earlier this month. The investments span budget hotels to coworking spaces, giving the travel giant a chance at differentiation amid late-stage competition.
WeWork, like Airbnb, is staying active ahead of its public debut and scooping up competitors with expertise in different verticals. More space under its belt doesn’t hurt, and a deal could signal to the market that WeWork has promising growth. We’ll see if that signal has weight soon enough.
Data credit: Alex Wilhelm.