WeWork Employees Call Out Ex-CEO Adam Neumann’s ‘Platinum Parachute:’ Term Sheet
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“You’ve got to be kidding me.”
That was one of the comments posted on WeWork’s staff-wide communications system Tuesday, according to a Bloomberg report (paywalled link). Dozens of employees expressed indignation in messages to colleagues on internal Slack channels.
The outrage comes after Softbank agreed to 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.
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, 90% of current and former employees are left holding stock options that are under water at the roughly $20-a-share valuation implied by the SoftBank deal. They’re expecting thousands of layoffs.
More from the Bloomberg report:
- Mike Adams, who sold a startup to WeWork, described the payout to Neumann as an “injustice.”
- Another former employee described Neumann’s deal as a “platinum parachute.”
- Another: “So we’re too broke to pay employees severance, but Adam gets $200m?” Several employees reportedly noted the irony that WeWork could not afford severance to people it planned to lay off, but that SoftBank agreed to pay a hefty fee to Neumann.
After my comments about how many WeWork employees were left high and dry, some Term Sheet readers weren’t as sympathetic. One tweeted: “At some point there is responsibility on the employee who takes a job to work at a company that has a) never proven it can turn a profit and b) is hemorrhaging billions a year.”
Another emailed: “Hard to feel sorry for them when (a) there have been deep concerns about the valuation and business model for a long time and (b) the vast majority of start-up employees never cash out of their options.”
Even so, I stand by my comments.
There were red flags along the way, but all hell broke loose only after WeWork’s S-1 revealed the reality of the company’s financial woes. In 2018, I wrote about the big lessons Silicon Valley could learn from the Theranos scandal. One of the central points was that accountability, transparency, and verification are king — especially when there’s big money on the line. But as USVP’s Dafina Toncheva said, “I have noticed that when a company is doing well and growing rapidly, private investors tend to forgive more.”
And so, we shouldn’t be surprised when history repeats itself.
- Total Expert, a Minneapolis-based marketing and customer engagement technology platform for banks, lenders and financial services, raised $52 million in Series C funding. Georgian Partners led the round, and was joined by investors including Emergence and Rally Ventures.
- Viz.ai, a Palo Alto, Calif.-based developer of synchronized healthcare software, raised $50 million in Series B funding. Greenoaks led the round, and was joined by investors including Threshold Ventures, CRV along with existing investors GV and Kleiner Perkins.
- Very Good Security, a San Francisco-based data security company, raised $35 million in Series B funding. Goldman Sachs’ Merchant Banking Division led the round and was joined by investors including Andreessen Horowitz and Vertex Ventures US.
- Coople, a Switzerland-based on-demand staffing platform, raised $32 million in Series C funding. Investors include Goldman Sachs Private Capital and One Peak Partners.
- PeerNova Inc, a San Jose, Calif.-based enterprise software company in the financial industry, raised $31 million in funding. Mosaik Partners led the round, and was joined by investors including Medici Ventures and Intuitive Venture Partners.
- Triller, a New York-based AI-powered music video platform, raised $28 million in Series B funding. Proxima Media led the round, and was joined by investors including Mahi de Silva.
- Grafana Labs, a New York-based company behind open source projects including Grafana and Loki, raised $24 million in Series A funding. Lightspeed Venture Partners led the round, and was joined by investors including Lead Edge Capital.
- AVIA, a Chicago-based partner for digital health insights, raised $22 million in funding. First Trust Capital Partners LLC led the round.
- Augmedix, a San Francisco-based developer of health-centric applications for Google Glass, raised $19 million in Series B funding. Investors include Redmile Group, McKesson Ventures, DCM Ventures, and Wanxiang Healthcare Investments.
- VoltDB, a Bedford, Mass.-based data platform, raised $10 million in Series C funding. The investors were not named.
- LabGenius, a U.K.-based provider of an A.I.-driven drug discovery platform, raised more than $10 million in Series A funding. Lux Capital and Obvious Ventures led the round, and was joined by investors including Felicis Ventures, Inovia Capital, Gigafund and Air Street Capital.
- Raydiant, a Mountain View, Calif.-based cloud-based, dynamic display platform, raised $7 million in funding. 8VC co-led the round, and was joined by investors including Atomic, Bloomberg Beta, Lerer Hippeau, SV Angel and Transmedia Capital.
- Bespoke Financial, a Los Angeles-based cannabis industry lender, raised $7 million in funding. Casa Verde led the round, and was joined by investors including Capital Partners and Outbound Ventures.
- Beam, a Massachusetts-based newly launched wellness brand offering CBD products, raised $5 million in funding. Obvious Ventures led the round.
- Logixboard, a Seattle-based digital partner for freight forwarders, raised $4.2 million in seed funding. Social Leverage led the round.
- Tines, a Dublin-based cybersecurity automation company, raised $4.1 million in Series A funding. Investors include Blossom Capital.
- OctoML, a Seattle-based deep learning startup, raised $3.9 million in funding. Madrona Venture Group led the round, and was joined by investors including Amplify Partners.
- Foundries.io, a U.K.-based developer of software platforms for embedded product development, raised $3.5 million in funding. Crane Venture Partners led the round, and was joined by investors including Backed VC.
- Voca.ai, an Israel-based provider of human artificial intelligence virtual agents, raised funding of an undisclosed amount. Investors include American Express Ventures, lool ventures and Flint Capital.
PRIVATE EQUITY DEALS
- Tender, which is backed by Victor Capital Partners, acquired RapidPure, a Lakeland, Fla.-based provider of water purification products. Financial terms weren't disclosed.
- Avon Machining, a portfolio company of Speyside Equity, acquired Plasma-Tec, a Michigan-based precision supplier for rapid turnaround of machined wear components. Financial terms weren't disclosed.
- Pine Tree Equity recapitalized Shortridge Academy Ltd, a Milton, N.H.-based therapeutic boarding school. Financial terms weren't disclosed.
- GFL Environmental Holdings, an Ontario, Canada-based waste management firm, now plans to raise $1.9 billion in an IPO of 87.6 million shares priced at a range of $20 to $24 apiece. The firm posted $1.9 billion in revenue in 2018 and loss of $483.3 million. BC Partners, Ontario Teachers, and GIC back the firm. It plans to list on the NYSE and TSX as “GFL.” Read more.
- BRP Group, a Tampa-based provider of insurance distribution, plans to raise $230 million in an initial public offering of 16.4 million shares priced at $14, the low end of its range. The firm posted revenue of $79.9 million in 2018 and income of $2.7 million. It plans to list on the Nasdaq as “BRP.” Read more.
- YX Asset Recovery, a Changsha, China-based consumer debt collector, filed for an IPO to raise $200 million in an IPO. The firm posted $110.4 million in revenue in 2018 and income of $18.1 million. Ping An Life Insurance backs the firm. It plans to list on the NYSE under an undisclosed symbol. Read more.
- SiTime, a Santa Clara, Calif.-based maker of microelectromechanical systems, filed for an IPO to raise $100 million in an IPO. The firm posted $85.2 million in revenue in 2018 and loss of $9.3 million. MegaChips Corporation backs the firm. It plans to list on the Nasdaq as “SITM.” Read more.
- Fangdd Network Group, a Shenzhen-based online real estate trading platform, says it plans to raise $98 million in an IPO of 7 million ADSs priced at $13 to $15 apiece (20% insider bought). It posted revenue of $69.4 million in 2018 and loss of $2.3 million in 2018. It plans to list on the Nasdaq under the symbol “DUO.” Read more.
- OneWater Marine, a Buford, Ga.-based recreational boat retailer, postponed plans to raise as much as $64 million in an IPO. The firm posted revenue of $603 million in the year ending Sept. 2018 and income of $29.3 million. LMI Holdings, and Goldman Sachs back the firm. It previously planned to list on the Nasdaq under “ONEW.” Read more.
- NMS Capital sold ettain, a Charlotte, N.C.-based provider of information technology services to companies in need of temporary IT services and support. The buyer was Alvarez & Marsal Capital. Financial terms weren't disclosed.
- Kell Reilly joined General Atlantic as a managing director.