WeWork has raised about $760 million at a $20 billion valuation in new funding round, according to filings with the Delaware Department of State.
WeWork has raised $760 million in a new Series G funding round, which according to sources close to the deal, puts the co-working space company’s valuation now stands at $20 billion, unnamed sources told Forbes, which previously reported the funding round. That would be higher than the $16.9 billion valuation last estimated by CB Insights. With the latest valuation, WeWork now tops the market caps of office REITs like Boston Properties ($18.25 billion) and Vornado Realty ($17.7 billion).
WeWork, considered a so-called sharing economy start-up, aims to let companies share a working space instead of taking on the overhead of a permanent office. As of the end of 2016, WeWork had 110 locations across the world. The start-up has said it plans to expand in cities like London, Beijing, Paris, and Detroit this year.
CEO Adam Neumann said last month that WeWork is generating $1 billion a year in revenue and will launch an initial public offering at some point, according to Reuters. WeWork members pay an average of $650 a month, Reuters reported.
WeWork one of many unicorns — start-ups valued at $1 billion or more — to eye a public offering as the private market cools from its peak between 2014 and 2016. Venture capital investing is in the midst of a “self-correction” period, according to a new report from the National Venture Capital Association and PitchBook.
“There’s optimism of a strong year ahead for venture-backed IPO activity,” the report said this week.
WeWork has raised about $1.8 billion from investors and venture capital funds since it began operations six years ago.
SoftBank Group Corp (9984.T) invested $300 million in WeWork in March, the first of a much larger funding round that could total up to $3 billion, according to a person familiar with the matter who spoke on condition of anonymity. (Reuters)
Two years ago, less than 1 percent of WeWork’s business was generated by Fortune 500-type companies. That figure is now about 30 percent and growing, Neumann said, interpreting that as a sign of a viable business model.
A communal housing model called WeLive, which the company has launched in New York City and Crystal City, Virginia, is 100-percent leased, but Neumann said the are no immediate plans to expand the concept as WeWork tries to perfect the product.
“WeLive is going to be a tremendous success,” he said.
He praised NYSE Group President Tom Farley, who runs the exchange, for his persistence in seeking WeWork’s listing. NYSE Group is owned by Intercontinental Exchange Inc (ICE.N). Neumann, who was quizzed by Farley in front of almost 200 people at the lunch, said his company will conduct an IPO, but did not say when that might occur.
WeWork, according to documents filed publicly with the Delaware Secretary of State on June 30th, issued 13.2 million new shares of preferred stock at a price of $57.90. This follows a $300 million investment made by Japan’s Softbank in March 2017. (We’re currently trying to confirm the investor of the June round–WeWork declined to comment on the latest investment and current valuation).
Founded by Adam Neumann and Miguel McKelvey in 2010, WeWork has grown from 1,000 members and two locations its first year operation to more than 120,000 customers in 156 offices. Now customers who pay on average $650 a month each, Neumann said. Five to 10 new sites open every month.
Launched in New York, WeWork’s ambitions have since gone global offering offices in 49 cities across 15 countries. With new $20 billion valuation, WeWork now tops the market caps of large REITs like Boston Properties Vornado.
In 2017 it opened new spaces in cities like Beijing, Buenos Aires, Paris, and Sao Paulo. New projects in Mumbai, Bogota, and Melbourne are expected to come online this year. And while its first clients were scrappy start-ups and freelancers, WeWork has moved heavily into the corporate market, leasing offices to companies ranging GM and IBM to Spotify and Salesforce.
The latest funding will fuel further expansion into new territories. And with Softbank on board in a big way, expect an aggressive push into Japan and across Asia.
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