- WeWork is reportedly in talks with SoftBank to raise more money
- The deal could send WeWork’s valuation soaring to $40 billion
- If that happens, WeWork would become the second most valuable US startup behind Uber
WeWork might become the United States’ second most valuable startup in the near future.
Several reports reveal that WeWork is looking to raise more money that would potentially value the company at $35 billion to $40 billion. This following the news that SoftBank Group, which invested $4.4 million in WeWork just last year, “is in discussions to invest another giant slug of capital in WeWork Cos.,” according to The Wall Street Journal.
If the deal comes through, WeWork’s valuation could potentially double from $20 billion to $40 billion. If this happens, WeWork would become the second most valuable US startup, just behind Uber.
The news exploded following Rajeev Misra, Head of SoftBank’s Vision Fund, statement at a tech conference in London where he said that the coworking giant is looking to raise money at a $35 billion valuation. Misra, according to accounts from an online video that has since been taken down, also stated that the company could reach a $100 billion valuation in the next few years.
Industry experts have for a long time criticized WeWork’s valuation, uncertain whether or not the company is able to survive through an economic downturn. Though the company has experienced exponential growth over the last 8 years, to date WeWork is still reporting losses and it recently had to sell “junk bonds” in order to further fund its expansion plans. The sale of the “junk bonds” brought WeWork numbers to light, revealing that its costs are growing faster than its revenue.
In a recent article in Allwork.Space, we argue that in order for WeWork to sustain its (already high) valuation, it needs to grow at an amazingly fast rate and it needs to constantly reinvent itself. However, it is worth noting that the company has the ability to build spaces at a faster rate and at a lower cost than most real estate companies and workspace operators in the industry.
Additionally, the coworking industry itself is expected to significantly grow within the next five years, with the number of coworking members expected to reach 3.8 million by 2020 and 5.1 million by 2022. This means that there is, indeed, an opportunity for WeWork (and other operators) to grow.
However, whether this warrants a $35 billion or $40 billion valuation, let alone the possibility of $100 billion, remains a topic of debate.
WeWork has over the past couple of years expanded beyond the world of coworking by establishing a co-living business, a fitness club, and an elementary school. It also bought a wave making pool company and a coding academy. How this all fits into WeWork’s growth strategy is still a mystery to many, though these ventures could help the company to attract investors and raise further funds.