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Softbank will provide WeWork $5 billion in new financing and up to $3 billion in a tender offer for existing shareholders. Softbank will also speed up an existing $1.5 billion financing commitment. After closing, and following the tender offer, Softbank will own approximately 80% of the co-working giant.
In a statement, Softbank’s Masayoshi Son said he is a firm believer that the world is undergoing a massive transformation in the way people work, and WeWork is “at the forefront of this revolution.”
He added: “It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced. Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support.” Hmm, I wouldn’t exactly characterize what happened with WeWork as “a growth challenge,” but alright.
The Wall Street Journal reported that WeWork secured a deal that could hand co-founder Adam Neumann a nearly $1.7 billion windfall and sever most of his ties with the company. The deal will value WeWork at approximately $8 billion. Ex-CEO Adam Neumann has the right to sell $970 million of shares, or roughly one-third of his stake, in the tender offer.
As Neumann walks away a billionaire, most of the employees are left holding stock options that are under water at the roughly $20-a-share valuation implied by the SoftBank deal. Thousands are expected to be laid off. Like we said yesterday, it’s important to remember that it’s not only deep-pocketed investors who lose out when a bet goes bad. A lot of employees do too — and unlike the shareholders invested in the business, it’s not something they can simply write off and walk away from.
UNFAIR ASSOCIATION: WeWork’s turmoil has far-reaching effects. At Fortune’s Most Powerful Women conference yesterday, female founders shared stories about how their businesses have been affected by fellow startups’ misconduct and failures.
Amy Nelson, founder and CEO of The Riveter, a co-working startup, said her company had sometimes suffered by association to WeWork. “I tend to think WeWork’s core business model is strong—though there are a lot of issues going on around it—but our model is different,” said Nelson during a panel discussion.
After the collapse of Theranos, a blood testing startup that was charged with fraud for exaggerating its technological capabilities, Julia Cheek, founder and CEO of EverlyWell, an at-home health testing startup, was frequently compared to Theranos founder Elizabeth Holmes. Colleagues and advisors even suggested Cheek dye her blonde hair another color so she would less resemble Holmes, who is blonde, she said.
It hasn’t helped, Cheek added, that yet another female-led medical testing startup, uBiome, was recently raided by the FBI amid allegations of fraudulent insurance billing—even though EverlyWell does not deal with insurance at all.
“There’s just a volume problem with female founders—so when you have one or two bad actors, and you’re in the same space, or you have any semblance of the same appearance, which is true for me,” said Cheek, “It is challenging from a lay person’s standpoint to be able to differentiate.”
VENTURE DEALS
- Databricks, a San Francisco-based provider of a cloud data platform, raised $400 million in Series F funding at a valuation of $6.2 billion. Andreessen Horowitz led the round, and was joined by investors including BlackRock, Inc., T. Rowe Price Associates, Inc. and Tiger Global Management.
- Fabric, a San Francisco-based automated logistics startup, raised $110 million in Series B funding. Corner Ventures led the round, and was joined by investors including Aleph, Canada Pension Plan Investment Board, Innovation Endeavors, La Maison, Playground Ventures and Temasek.
- Benevity, Inc., a Canada-based developer of workplace giving and volunteer management software, raised $40 million in Series C funding. Investors include General Atlantic and JMI Equity.
- Aurora Insight, a Washington D.C.-based provider of a “dynamic” global map of wireless connectivity, raised $18 million in Series A funding. Alsop Louie Partners and True Ventures co-led the round, and was joined by investors including Tippet Venture Partners, Revolution's Rise of the Rest Seed Fund, Promus Ventures, Alumni Ventures Group, ValueStream Ventures, and Intellectus Partners.
- Truebill, a Washington, D.C.-based personal financial management solution, raised $15 million in Series B funding. Eldridge Industries led the round, and was joined by investors including Evolution VC, Cota Capital, Lucas Venture Group, and Jawed Karim.
- Literati, an Austin-based subscription book service, raised $12 million in funding. Shasta Ventures led the round.
- Fairmarkit, a Boston-based tail spend management platform, raised $11 million in Series A funding. Insight Partners led the round.
- Firedome, a New York-based provider of cybersecurity solutions, raised $10 million in Series A funding. Two Sigma Ventures led the round, and was joined by investors including World Trade Ventures and Silvertech Ventures.
- Winnie, a San Francisco-based marketplace for childcare and early education, raised $9 million in Series A funding. Rethink Impact led the round, and was joined by investors including Reach Capital, Impact America Fund, Unusual Ventures, Ludlow Ventures, Afore Capital, Day One Ventures, Kairos, and April Underwood.
- Bespoke Financial, a Los Angeles, Calif.-based short-term lender focused on the cannabis industry, raised $7 million in funding. Casa Verde led the round.
- nicecactus.gg (f.k.a. Esport-Management.com), a France-based competitive e-gaming platform, raised EUR 5 million ($5.5 million) in Series A funding. The investors were not named.
- MarginEdge, an Arlington, Va.-based restaurant software platform, raised $5 million in Series A funding. Osage Venture Partners led the round, and was joined by investors including In Good Company.
- Medinas, a Berkeley, Calif.-based asset management company for hospitals, raised $5 million in seed funding. NFX led the round, and was joined by investors including Precursor Ventures, Sound Ventures, FJ Labs and Bryan Frist.
- Flip Fit, a Los Angeles-based fashion technology company, raised $3.75 million in seed funding. TLV Partners led the round, and was joined by investors including Lool Ventures.
- Reibus, an Atlanta-based online marketplace for industrial materials, raised $3.25 million in seed funding. Bowery Capital led the round, and was joined by investors including Initialized Capital and Stage 2 Capital.
- U-Nest, a Burbank, Calif.-based mobile app that creates a savings plan for college and other educational expenses, raised $2 million in seed funding. Investors include The Artemis Fund, Draper Dragon, Unlock Ventures, Vested Ventures, and Band of Angels.
- SIBEX AG, a Switzerland-based developer of peer-to-peer software that aims to create arbitrage opportunities for institutional traders, raised CHF 1.78 million ($1.8 million) in seed funding. Investors include Fenbushi Capital, Accomplice VC, and SIX.
- Bizly, a New York-based enterprise software that allows employees to build in-person meetings and events, raised $1.5 million in funding. Investors include JetBlue Technology Ventures, Eric Yuan of Zoom, and Hone Capital.
PRIVATE EQUITY DEALS
- Anacapa Partners made an investment in I4PRO Informática LTDA, a Brazil-based end-to-end enterprise resource planning solution for the insurance market. Financial terms weren't disclosed.
OTHER DEALS
- Squarespace acquired Unfold, a social media management app that helps users create content for Instagram, Facebook and Snapchat. Financial terms weren't disclosed.
- Vacasa acquired Wyndham Vacation Rentals, a Parsippany, N.J.-based provider of rental properties, from Wyndham Destinations (NYSE: WYND) for $162 million.
IPOs
- Reynolds Consumer Products, the maker of Reynolds aluminum foil and Hefty trash bags, plans to seek a $7 billion valuation in its U.S. via an IPO, Bloomberg reports citing sources. The deal could come as soon as this year or in the first quarter of 2020. Rank Group backs the firm. Read more.
- PropertyGuru, a Singaporean real estate listing firm, withdrew an Australian IPO that could have raised as much as A$380 million ($260 million). TPG Capital and KKR back the firm. Read more.
FIRMS + FUNDS
- TPG Sixth Street Partners, a San Francisco-based investment firm, raised $2.2 billion for its new fund.
- Morgan Creek Digital, a New York-based asset management firm focused on digital assets, raised $60.9 million for its second blockchain-focused venture capital fund. The fund’s target is $250 million.
