WeWork has
picked up another $3 billion in financing from SoftBank Corp, not to be
confused with SoftBank Vision Fund. The deal comes in the form of a warrant,
allowing SoftBank to pay $3 billion for the opportunity to buy shares before
September 2019 at a price of $110 or higher, ultimately valuing WeWork at $42
billion minimum.
In August,
SoftBank Corp invested $1 billion in WeWork in the form of a convertible note.
According to
the Financial Times, SoftBank will pay WeWork $1.5 billion on January 15, 2019
and another $1.5 billion on April 15.
SoftBank is
far and away WeWork’s biggest investor, with SoftBank Vision Fund having poured
$4.4 billion into the company just last year.
The real
estate play out of WeWork is just one facet of the company’s strategy.
More than
physical land, WeWork wants to be the central connective tissue for work in
general. The company often strikes deals with major service providers at “whole
sale” prices by negotiating on behalf of its 300,000 members. Plus, WeWork has
developed enterprise products for large corporations, such as Microsoft, who
tend to sign longer, more lucrative leases. In fact, these types of deals make
up 29 percent of WeWork’s revenue.
The biggest
issue is whether or not WeWork can sustain its outrageous growth, which seems
to have been the key to its soaring valuation. After all, WeWork hasn’t yet
achieved profitability.
Can the
vision become a reality? SoftBank seems willing to bet on it.
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