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What WeWork’s IPO Prospectus Tells Us About Its Business: Term Sheet

August 14, 2019, 1:28 PM UTC

This week’s Term Sheet theme has been around massive valuations, so today’s edition features We, the parent company of WeWork. The co-working behemoth just released its much-awaited IPO prospectus, which revealed new details about its financial performance. 

WeWork was most recently valued at $47 billion after SoftBank, the company’s largest backer, invested an additional $2 billion in January. In its S-1, WeWork reported revenues of $1.5 billion and a net loss of more than $690 million for the first six months of 2019. For the full year of 2018, it showed $1.8 billion in revenue with a loss of $1.6 billion. (You can see the figures further broken down here.)

“Our membership base has grown by over 100% every year since 2014,” the S-1 reads. “It took us more than seven years to achieve $1 billion of run-rate revenue, but only one additional year to reach $2 billion of run-rate revenue and just six months to reach $3 billion of run-rate revenue.”

WeWork has raised approximately $8.4 billion in a combination of debt and equity funding since its founding. Its largest outside shareholders include SoftBank, which owns 114 million pre-IPO shares, Benchmark Capital, which owns 33 million, and JP Morgan, which owns 18 million. 

Some of WeWork’s risk factors include:

— May be unable to achieve profitability for the foreseeable future 
— May fail to manage growth effectively 
— May not be able to continue to retain existing members or to attract new members in sufficient numbers 
— An economic downturn could adversely affect the results of operations (Allow me to translate: “Sweet baby Jesus, let us pray that the economy doesn’t go to hell because it ain’t gonna be pretty for us.”)

Adam Neumann, the company’s eccentric CEO, is also listed as a risk factor, noting that the company’s future success depends in large part on him continuing to serve as CEO, “which cannot be ensured or guaranteed.” 

It goes on to say: “Adam has been key to setting our vision, strategic direction and execution priorities. We have no employment agreement in place with Adam, and there can be no assurance that Adam will continue to work for us or serve our interests in any capacity.” 

Neumann has described his company as a “capitalist kibbutz,” where weakness won’t be accommodated. He once told a reporter that WeWork’s 11-figure valuation had less to do with its revenue than its “energy and spirituality.” (The word “energy” is mentioned 13 times in the S-1.) 

Neumann has been facing some scrutiny in recent days for cashing out more than $700 million from the company ahead of its IPO via a mix of stock sales and debt, according to The Wall Street Journal. According to the filing, the last time that Neumann sold shares was in late 2017. WeWork also came under fire for turning to a complex corporate structure for its IPO that would give tax benefits to co-founder Neumann and early investors. 

The company is expected to go public in September and to list its shares under the symbol “WE.” It is also anticipated to be the second-largest IPO this year, after Uber. 


- Scoop, a San Francisco-based enterprise carpooling company,  raised $60 million in funding. Activate Capital led the round, and was joined by investors including NGP Capital, BNP Paribas, Total Ventures, Index Ventures, Signia Venture Partners, Workday Ventures, and G2VP. 

- Cinq Music, a Los Angeles-based music distribution, record label, and rights management company, raised $40 million in Series C funding, from GoDigital Media Group

- Schedulicity, a Bozeman, Montana-based online platform for consumers to schedule appointments, classes and workshops, raised $22 million in funding. The investors were not named.

- OpenSpace, a San Francisco-based construction tech startup, raised $14 million in Series A funding. Lux Capital led the round, and was joined by JLL Spark, Navitas Capital, Suffolk Construction, Tishman Speyer, WeWork, Zigg Capital, and Goldcrest Capital.

- Kasten, a Los Altos, California-based provider of cloud-native data management solutions, raised $14 million in Series A funding. Insight Partners led the round.

- Baze, a Cambridge, Mass.-based provider of a blood-based, at home nutritional testing kit, raised $6 million in Series A funding. Nature’s Way led the round.


- Landos Biopharma Inc, a Blacksburg, Va.-based clinical-stage biopharmaceutical company, raised $60 million in Series B funding. RTW Investments and Perceptive Advisors led the round.

- GNA Biosolutions GmbH, a Germany-based molecular diagnostics company, raised $13.5 million in Series C funding. Investors include GreyBird Ventures, Occident, Wachtumsfonds Bayern, SHS Gesellschaft für Beteiligungsmanagement, Robert Bosch Venture Capital, UVC Partners, Mey Capital Matrix, KfW and btov Partners.


-  BC Partners will acquire Presidio, Inc. (NASDAQ:PSDO) for approximately $2.1 billion in cash, including Presidio’s net debt.

-  Quick Base, which is backed by Vista Equity Partners, acquired Cloudpipes, a London and Bulgaria-based integration and automation platform. Financial terms weren't disclosed. 

-  Syndigo, which is backed The Jordan Company, acquired SellPoints, an Emeryville, Calif.-based ecommerce optimization platform. Financial terms weren't disclosed. 

-  Pexco, which is backed by AEA Investors, acquired HPE Extrusion Solutions, a Bally, Penn.-based custom manufacturer of extruded plastic profile products. Financial terms weren't disclosed. 

-  Stella Environmental Holdings Inc, a portfolio company of Hidden Harbor Capital Partners, acquired Jack Herod Trucking LLC, a Dallas-based provider of of transfer station management and ancillary waste logistics services. Financial terms weren't disclosed. 

-  Battery Ventures acquired two companies: Forest2Market, Inc. a Charlotte, N.C-based firm supplying data, analytics, supply chain expertise and strategic consulting services to the global forest products industry; and Fisher International, Inc. a South Norwalk, Conn.-based firm supporting the pulp and paper industry with business intelligence and strategy consulting services. Financial terms weren't disclosed. 


-  Castle Harlan and Branford Castle Partners acquired Sunless Inc, a Macedonia, Ohio-based provider of spray tanning equipment, spray tanning solution and related accessories. The sellers include Riverside Company. Financial terms weren't disclosed. 


-  Vivo Capital, a Palo Alto, Calif.-based private equity and venture capital firm, raised more than $1.3 billion for its ninth fund, according to an updated SEC filing

-  Great Point Partners, a Greenwich, Conn-based private equity firm, raised $306 million for is third growth buyout fund. 


-  H.I.G. Capital promoted Matt Hankins to managing director. 

-  Fireman Capital Partners promoted Devon Howard to vice president.

Sarita Gavhane joined Edgewater Capital Partners as a vice president.