Photo by WeWork
NEW YORK CITY—Softbank Group Corp. has confirmed that it is cutting its planned investment in shared office space provider WeWork Cos. from $16 billion to $6 billion.
Earlier published reports stated that Softbank was reducing the investment to $2 billion.
WeWork announced today that it has received the $6-billion investment from Softbank. A total of $5 billion is in the form of primary growth capital and the remaining $1 billion is in secondary capital, which will be used to fund share purchases from investors and employees. WeWork's post-money valuation is now $47 billion, the companies report.
Tokyo-based Softbank Group and its $100-billion Vision Fund had already invested approximately $8 billion in WeWork, but the Financial Times and Wall Street Journal first reported that the Japanese conglomerate was cutting back the capital infusion.
The new investment includes a previously announced $4-billion funding commitment from SoftBank in the form of a $1-billion convertible note and a $3-billion warrant. WeWork and its subsidiaries have now raised more than $10 billion in total commitments from SoftBank since 2017, WeWork stated in a press announcement.
The initial announced investment by Softbank was to involve a $10-billion purchase of the existing WeWork stock and $6 billion in new capital, to be provided over a three-year term.
The decision by Softbank to reduce its latest investment in Softbank was based on the battering tech shares have taken of late and investor concern over its Vision Fund. It should be noted that the $6-billion infusion in WeWork will make it one of Softbank's largest investments in a tech start up.
“WeWork is disrupting a multi-trillion-dollar industry with a technology platform that provides a complete solution for space needs. WeWork has already experienced unparalleled growth and we are confident that with Adam's (WeWork CEO Adam Neumann) vision and this growth capital the company will be able to aggressively pursue the enormous market opportunity ahead of them,” states Masayoshi Son, chairman & CEO of SoftBank Group Corp.
WeWork today also announced today the launch of The We Company. The We Company will establish WeWork, WeLive, and WeGrow as three distinct business lines that will expand upon WeWork's existing efforts in the following areas—WeWork's mission is to create a world where people work to make a life, not just a living; WeLive's mission is to build a world where no one feels alone and WeGrow's mission is to unleash every human's superpowers.
“Through the extended WeWork network and the Meetup community, The We Company now touches approximately 5 million people around the world, with the funding to reach millions more. We're driven by the impact we know we can have when we all work together with a shared intention. I am grateful to our employees, members, and our incredible partner in SoftBank for their commitment to our mission,” states Neumann, co-founder and CEO of The We Company.
WeWork, founded in 2010, began 2019 with more than 400,000 members at 425 locations in 100 cities across 27 countries. Enterprise customers (members with more than 1,000 employees) accounted for over 30% of the company's total membership base.
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
