The SoftBank Rescue Package Is Here: Term Sheet

October 14, 2019, 11:53 AM UTC

Fear not, the SoftBank rescue package is here. 

SoftBank moved to oust founder Adam Neumann before WeWork made its public market debut. Now, it’s offering the company a lifeline. WeWork is currently considering a bailout that will hand control of the co-working giant to SoftBank.

The financial package would invest several billion dollars in new equity and debt, according to The Wall Street Journal. The fresh capital would relieve the company of its cash crunch that could leave it short of funds as soon as next month. In turn, SoftBank, WeWork’s largest shareholder, would take control of the company. 

There’s also another possibility: The WeWork board has also tapped JPMorgan to look at ways for the company to raise billions in debt. My colleague Rey Mashayekhi has a story this morning that details why JPMorgan has taken such an outsize interest in WeWork and its ex-CEO Adam Neumann. Hint: its reputation. 

WeWork’s public offering was meant to be the crowning achievement of a resurgent year for JPMorgan’s IPO advisory business, which has traditionally lagged behind its rivals at Goldman Sachs and Morgan Stanley. Instead, the bank has been scrutinized for letting the deal get as far as it did—with the wreckage of WeWork’s failed IPO joining disappointing offerings this year by Lyft and SmileDirectClub, both of which had JPMorgan as their lead underwriter.

What a mess this whole thing has become. Neither deal is confirmed, but WeWork’s board is expected to meet as soon as this afternoon to decide between two plans. And if it doesn’t come to an agreement? If the company is unable to raise new financing before the end of November, according to the FT, it could face something that executives within WeWork never thought was possible just weeks ago: bankruptcy.

5 Qs WITH A DEALMAKER: Dafina Toncheva’s journey to Silicon Valley has been anything but ordinary. 

She grew up in Bulgaria (like me!) during a turbulent time of change when the country was struggling to emerge from communism. Although her parents were doctors, they each earned only $150 a month.

Toncheva spent summers with her grandparents on their tobacco farm where they would pick tobacco leaves and work the land. “As you can imagine, it was just very manual, labor-intensive, and unpleasant work,” she said.

But it was on that farm where her grandmother gave her advice that Toncheva would carry with her as she immigrated to the United States, graduated from both Harvard and Stanford, and entered the cutthroat world of venture investing. Her grandmother said, “If you don’t want to make a living with your hands, you need to invest in your brain.”

“Her advice ultimately help me grow into an independent, self-sufficient, and self-reliant adult,” Toncheva said. “And those are also the qualities I look for in the founders I back.”

Toncheva moved from Bulgaria to the United States in 1998 on a full scholarship to Harvard University. From there, she worked at Microsoft as a software engineer, went on to get an MBA from Stanford, and joined Venrock in her first job in venture capital. She became the first institutional investor in Cloudflare, a San Francisco-based network performance and cybersecurity firm that just went public. 

Toncheva has spent the last seven years investing in cybersecurity and enterprise software companies at early-stage investment firm U.S. Venture Partners. Last week, she was promoted to general partner. I recently caught up with Toncheva about all of this and more. 

Below is an excerpt from our conversation. (Read the full Q&A here.)

TERM SHEET: When you were 15 years old, you created a peanut business that generated more revenue than the combined income of your parents. Tell me about that. 

TONCHEVA: I was born in a communist country, but my formative years were spent in a country that was trying to define itself, embrace capitalism, and open up to the world. It was a very turbulent time after [communism fell in] 1989 socially, politically, and economically. 

There were entrepreneurial-minded people who tried to take advantage of the change by starting businesses. Many people around us were opening small mom-and-pop shops — except for my parents. They were doctors and they felt very limited by their careers. So I remember thinking, “It’s kind of unfair that my parents spent so much of their lives studying, investing in their careers, and being good at what they do, yet we’re still barely making ends meet.” I wanted to help, so I decided to try and start something on my own. What entrepreneurship started to mean to me was courage, expression of freedom, creativity, and growth. It had this very noble, very positive connotation in my mind.

So I started buying raw peanuts from local farms, and I began roasting them, packaging them, and selling them through wholesale retailers to restaurant chains. I created a real operation that was powered by me and my younger brother. With that very basic business, I made more money than my parents combined. That was the beginning of my self-sufficiency and independence that my grandmother always talked about. It was both exciting, but also disillusioning in some ways to know that I can make more money than my parents with a lot less education and experience.

Why did you decide to immigrate to the United States? 

One of the things that was so defining for me in my childhood was that my parents valued education, ethics, persistence, and commitment to personal growth. My mother was an ENT (ears, nose, and throat) surgeon, and my father was a neurologist, yet they still barely made ends meet as a family. That was the reality of communism — where everyone was supposed to be equal — that made no sense to me. I knew I didn’t want my life to end up like that. 

During that time of change in post-communist Bulgaria, many people of my generation saw the U.S. as the symbol of meritocracy and the victory of capitalism. It was a very natural place for me as a teenager who wanted to build a better life to end up, but getting to the U.S. was very difficult.

The person who opened my eyes to studying in the States was a young American volunteer who was teaching English in my hometown. Through him, I learned that I could apply to schools in the States, that they give financial aid to foreigners, and that it’s a real possibility. It was a long process, but I ended up contacting over 100 schools. I asked all of them to waive the application fee, and I applied for financial aid at every single school. I was very lucky to get into 12 schools on full scholarship. 

So I moved here in 1998, started at Harvard, and studied computer science even though I had never owned a computer and was very clearly behind all of my classmates. I thought technology was a growing market, and there was a real need for software engineers. I worked the whole time while I was at Harvard as a teaching assistant, later did internships with Microsoft during the summers, and ultimately, ended up working for Microsoft as a software engineer in 2002.

You mentioned capitalism. There’s increasing backlash against capitalism with critics saying it needs a major overhaul to better serve society. Given your experience growing up in a country where you witnessed the effects of communism, do you think capitalism needs to be reformed?

I firmly believe that we live in the best place in the world, and I say that unapologetically. That being said, I also realize that we have some challenges we need to work through. 

I love capitalism. It might not be perfect, but it’s the best out there. Having lived through communism and some forms of post-communist socialism, I just can’t imagine that system being a great alternative. Just the thought of communism and socialism depresses me. I envision it as this bleak world devoid of creativity and self-expression with no pursuit of self-improvement. It’s a dead end, it really is. I get scared hearing about people’s fascination with socialism because those are typically people who have never experienced it first-hand. It’s very theoretical for them.

It’s just a different feeling for people who have lived through it and experienced it first-hand. I’m sure your parents also have some strong opinions about communism.

My dad, especially. He recently told me a story about getting in trouble at school because he wrote “USA” on his bookbag when Bulgaria was still under communism. 

I’m not surprised at all. In Bulgaria, “USA” stood as a symbol for capitalism and a better life for many, many years.

On the other hand, capitalism has left many people disillusioned. The equality gap is wide and widening, and it’s become a vicious, reinforcing cycle. I have to say I do appreciate the discussions going on especially by capitalists like Ray Dalio and Jamie Dimon who talk about ways to create more upward mobility. I think these are good discussions to be had, and it’s a way to evolve capitalism with the times. 

How did you end up in venture capital?

I spent four years at Microsoft as an engineer and a product manager. There, I worked on security products and then decided to go to business school. I attended Stanford, and that’s how I ultimately ended up in venture capital. Toward the end of my second year, I was introduced to Venrock, where I was focused on helping the team source investment opportunities in enterprise software and cybersecurity. 

While you were at Venrock, you led the first institutional investment round in Cloudflare, which just went public. What did you see in the company and the team that gave you the confidence to back them so early?

I invested in Cloudflare exactly 10 years ago. There were three things that stood out to me. They were going after a really painful problem, which was that 50% of traffic is not authentic. It could be malicious. They were going after a customer group which was completely ignored, which was the longtail of the web. They said they would build a service that cleans up traffic to web properties from the longtail of the web — and they would do it for free and find other ways to monetize the business. That was very counterintuitive to how most security companies think. Most security companies would build a product or service and try to sell it to the biggest customers — the ones that have the biggest budgets. It was very contrarian what they were trying to do, but at the same time, it made a lot of sense. 

The team was thoughtful, persistent, and they had a clear vision around what they wanted to build. I just had a lot of faith in them that they would execute, and I’m really happy with how far they’ve come on this journey. Seeing them go public made me feel validated in my belief in them from Day 1 when they didn’t have anything  — they didn’t have a single line of code. 

For me, it starts with the founders and how clear and persistent they are in their vision. It really is a character judgment that’s very difficult to explain, but it’s one of the most important aspects of early-stage investing.

Read the full Q&A here.

HOUSEKEEPING: I’m going to Columbus for a robotics conference, but I’ll probably still be tweeting about deals, so you can find me on Twitter here. In my absence, my colleague Lucinda Shen will be in charge of compiling the deals and keeping you up to date for the next two days. Please send deals and scoops her way at


- Lattice, a San Francisco-based people management platform, raised $25 million in Series C funding. Tiger Global led the round.

- Citrine Informatics, a Redwood City, Calif.-based developer of a materials artificial intelligence operating platform, raised $20 million in Series B funding. Prelude Ventures and Innovation Endeavors led the round, and was joined by investors including Moore Strategic Ventures and Next47.

- Vahdam, an India-based tea and superfoods brand, raised $11 million in Series C funding. Sixth Sense Ventures led the round, and was joined by investors including Fireside Ventures.

- Florence, an Atlanta-based clinical trials software company, raised $7.1 million in Series B financing. Fulcrum Equity Partners led the round, and was joined by investors including Atrium Health and Bee Partners.

- Blue Canoe, a Bellevue, Wash.-based artificial intelligence B2B company that helps non-native English speakers improve their spoken English, raised $2.5 million in seed funding. Tsingyuan Ventures led the round.

- Remote Year, a Dover, Delaware-based work-travel platform, raised $5 million in funding. Lightbank led the round, and was joined by investors including Highland Capital Partners.


- Mogrify Ltd, a U.K.-based biotechnology company focused on developing cell therapies, raised $16 million in Series A funding. Ahren Innovation Capital led the round, and was joined by investors including Parkwalk.


- CONSOR Engineers, a portfolio company of Keystone Capital, acquired TKW Consulting Engineers, a Fort Myers, Fla.-based engineering and inspection firm specializing in water/wastewater, structural and civil projects. Financial terms weren't disclosed. 

- Lovell Minnick Partners acquired Billhighway, a Troy, Mich.-based provider of integrated software and payments solutions to membership-based organizations. Financial terms weren't disclosed. 

- Kibo, a portfolio company of Vista Equity Partners, agreed to acquire Monetate, a Conshohocken, Penn.-based testing and optimization provider. Financial terms weren't disclosed. 

- Edgewater Capital Partners agreed to acquire Haematologic Technologies Incorporated, a a provider of biologic products and GMP compliant assay development and testing services to the biopharmaceutical industry. Financial terms weren't disclosed. 

- Guidehouse, a portfolio company of Veritas Capital, acquired Navigant Consulting, Inc, a Chicago-based provider of professional services. Financial terms weren't disclosed. 

- TA Associates and Charlesbank Capital Partners agreed to invest in HelpSystems, an Eden Prairie, Minn.-based provider of IT infrastructure software. Financial terms weren't disclosed. 


- 3M (NYSE: MMM) acquired Acelity, Inc., a San Antonio, Texas-based advanced wound care company, and its KCI subsidiaries worldwide, for an enterprise value of $6.7 billion. Sellers include Apax Partners, the Canada Pension Plan Investment Board, and the Public Sector Pension Investment Board.

- Uber acquired a majority stake in Cornershop, a Mexico City-based grocery delivery startup. Financial terms weren't disclosed. Cornershop had raised approximately $31.7 million in funding from investors including Accel, ALLVP, Jackson Square Ventures, and Creandum.

- Cornell Capital acquired Spectrum Automotive Holdings Corp, a Fairfield, N.J.-based provider of finance and insurance products for the U.S. automotive market. The seller was Southfield Capital. Financial terms weren't disclosed. 


- Fifth Wall named Nic Poulos as a partner,  Shannon Brady as an associate, and Kevin Nee as the head of capital formation. 

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