Is former WeWork CEO Adam Neumann preparing his second act?
Some two years ago, office-sharing company WeWork withdrew its IPO plans after struggling to find investors willing to invest at a $47 billion-plus valuation. Much of the stories honed in on CEO and co-founder, Adam Neumann, whose partying and alleged self-dealing pointed to a lack of checks-and-balances at the company.
On Thursday, the company finally went public in a merger with BowX Acquisition, a special purpose acquisition company with quite a few changes: No longer is Neumann CEO—instead, it was real estate executive Sandeep Mathrani that appeared at the New York Stock Exchange. Gone too was the company’s $47 billion valuation—instead, the company, even after a 13% jump in its stock price, is still valued at a fraction of that: $10.9 billion.
The company itself says it has made significant changes to lower costs—beyond the headlines of offloading frivolous investments like a wave-pool company, the company has also said that it has cut costs by $2 billion since the fall of 2019, in part by exiting or amending some 500 leases in buildings that were underperforming. It also moved away from overseas markets like China, selling a majority stake of its business for $200 million in 2020.
Along with a fresh roster of investors, including Insight Partners, Starwood Capital, and Fidelity Management, WeWork bulls also believe that the overall world has shifted to its benefit, as more and more workers look to work outside of a centralized office.
But there are also things that have stayed very much the same for WeWork: Kneecapped by the global pandemic, its total revenue has still yet to recover from the doldrums of the crisis. While that figure sat at $756 million in the second quarter of 2019, it was $593 million in the second quarter of 2021. And even on an adjusted EBITDA basis, the company still remains unprofitable. And while the more bombastic language from WeWork’s 2019 IPO filing is gone, flames of that past optimism remain: The company is expecting a quick bounceback in the amount it will earn per membership, while simultaneously growing its total membership (page 20 of this presentation), this year. While WeWork points to ways to grow by partnering more with real estate-related companies that have faced struggles in the pandemic (Saks Fifth Avenue, for example), the question that gripped the company in 2019 still remains: Will the company justify its valuation?
At any rate, it’s true: WeWork is not gone—neither is, as it seems, Neumann, who after disappearing from the limelight in 2019 made a very public appearance Thursday morning to celebrate the listing in another part of New York City. Despite his public battles with SoftBank, Neumann still holds about 11% of WeWork (he was ousted as CEO in 2019). Though he has given up most of his voting rights, that along with other severance packages means he is still, yes, a billionaire.
Neumann played a major role in the WeWork fallout. But the reality is that he won’t be punished by any sort of ban from the industry. Armed with that newly liquid wealth (though he is barred from selling for nine months), it seems, is interested in “building another giant business,” per the Wall Street Journal. And even if that doesn’t work out, Neumann has been making investments, making a $30 million bet in Alfred, a real estate startup.
TRUMP’S TRUTH SOCIAL: There are two other alternative versions of yesterday’s newsletter, one diving into the office-sharing startup above and another into PayPal’s reported courting of Pinterest for a potential price of about $45 billion. And then this newsletter got thwacked by DWAC—or rather, news of DWAC, the special purpose acquisition company that is planning to take former President Donald Trump’s yet-to-be-launched social media company public. But then the news didn’t stop.
As predicted, it became a meme stock. Digital World Acquisition rose 350% on Thursday and then rose yet another near 200% this morning, giving it a total valuation of about $4.3 billion—a massive step up from the questionable $1.7 billion valuation DWAC and Trump Media and Technology Group had given the company. All for a company that has yet to post any sort of financials—which puts it at risk for quite a bit of volatility.
Jessica Mathews compiled the IPO and SPAC sections of this newsletter.
- Brex, the San Francisco-based corporate credit card startup, raised $300 million valuing it at $12.3 billion, per TechCrunch. Greenoaks led the round.
- VideoAmp, a Los Angeles-based advertising media analytics company, raised $275 million at a $1.4 billion valuation. Investors included Spruce House Partnership, D1 Capital Partners, Tiger Global, EPIQ Capital Group, and Ankona Capital Partners.
- Rippling, a San Francisco-based employee management software company founded by Parker Conrad, raised $250 million. Sequoia Capital Global Equities and Global Growth led the round and were joined by investors including Greenoaks, Kleiner Perkins, Founders Fund, Initialized, YC, and Threshold Ventures.
- Parallel, an Ethereum-based NFT sci-fi card game, raised $50 million at $500 million in funding. Paradigm led the round and was joined by investors including YouTube co-founder Chad Hurley, Focus Labs, OSS Capital, and Yunt Capital.
- Candy Digital, a New York City-based digital collectible company, raised $100 million in Series A funding valuing it at $1.5 billion. Insight Partners and Softbank Vision Fund 2 led the round and was joined by investors including Connect Ventures, Will Ventures, Gaingels, Com2Us, and Athletes Syndicate in partnership with Chaos Ventures.
- ReCode Therapeutics, a disease-modifying genetic medicines company, raised $80 million in Series B funding. Pfizer Ventures and EcoR1 Capital led the round and were joined by investors including Sanofi Ventures, Tekla Capital Management, Superstring Capital, and NS Investment.
- Jupiter, a San Mateo, Calif.-based climate analytics company, raised $54 million in Series C funding. Clearvision Ventures and MPower Partners led the round.
- Zerigo Health, a San Diego, Calif.-based light therapy company, raised $43 million in Series B funding. 7wireVentures led the round.
- Via Separations, a Watertown, Mass.-based decarbonization company, raised $38 million. NGP ETP led the round and was joined by investors including 2040 Foundation, The Engine, Safar Partners, Prime Impact Fund, Embark Ventures, and Massachusetts Clean Energy Center.
- Worldcoin, an Ethereum-based cryptocurrency maker that scans eyeballs, raised $25 million in funding. Andreessen Horowitz led the round and was joined by investors including Coinbase, Reid Hoffman, Day One Ventures, Multicoin, FTX’s Sam Bankman-Fried and Variant’s Jesse Walden. It values the company at $1 billion.
- Yummy, a Venezuelan delivery super app, raised $18 million in Series A funding. Anthos Capital led the round and was joined by investors including JAM Fund.
- Leucid Bio, a London-based cancer cell therapies company, raised £11.5 million ($16 million) in Series A funding. Epidarex led the round and was joined by investors including Vulpes Investment Management, 2Invest and Future Fund of the British Business Bank.
- B12, a New York City-based startup focused on payments and digitization for smaller businesses, raised $15.7 million in funding. Tola Capital led the round and was joined by investors including Breyer Capital, General Catalyst, and Naval Ravikant.
- AirGarage, a parking software company, raised $12.5 million in Series A funding. A16z led the round and was joined by investors including Floodgate, Founders Fund, and Abstract Ventures.
- Rhombus Systems, a Sacramento, Calif.-based physical security solutions company, raised $10 million. Cota Capital led the round and was joined by investors including MSD Partners, Lemnos Labs, and Promus Ventures.
- Toolio, a New York City-based supply chain startup, raised $8 million ini Series A funding. Jump Capital led the round and was joined by investors including Rho Capital’s Ignition Fund, Founder Collective, Notation Capital, and Max Ventures.
- Ando, a San Diego, Calif.-based sustainable banking startup, raised $6 million. TTV Capital led the round and was joined by investors including HOF Capital, Kinetic Ventures, and NNS Group.
- Socratic, a New York City-based task management system startup, raised $3 million in seed funding. Investors included Unusual Ventures and Overtime.vc.
- Audit Sight, an Atlanta-based auditing tech company, raised $2.5 million in seed funding. Hyde Park Venture Partners led the round.
- Sensoneo, a Slovakia-based smart waste management company, raised €2 million from EIC Fund and Venture to Future Fund.
- REDIST, a New York City-based startup looking to make it easier for real estate developers to fix tax breaks, raised $1.9 million in seed funding. Investors included Hometeam Ventures, Park West, and New York Ventures.
- Blackstone agreed to take a majority stake in Spanx, an Atlanta-based women’s shapewear clothing maker, in a deal valuing it at $1.2 billion. Spanx also committed to an all-female board.
- CM Group, backed by Insight Partners, merged with Cheetah Digital, a portfolio company of Vector Capital. Financial terms weren't disclosed.
- CORE Industrial Partners’s CGI Automated Manufacturing acquired Advanced Laser Machining, a provider of metals-focused contract manufacturing solutions. Financial terms weren't disclosed.
- National Fire & Safety, a portfolio company of Highview Capital, acquired All Pro Fire Protection, a Littleton, Colo.-based fire and life safety services business. Financial terms weren't disclosed.
- The Blue Ocean strategy managed by EnTrust Global acquired Maas Capital Shipping, a shipping equity investor from ABN AMRO for about $1 billion.
- Sovos, backed by HG and TA Associates, agreed to acquire Digital Planet, a Turkey-based cloud compliance solution company. Financial terms weren't disclosed.
- Everly Health acquired Natalist, a Charleston, S.C.-based women’s health company backed by the likes of Cowboy Ventures and Collaborative Fund. Financial terms weren't disclosed.
- FlixMobility acquired Greyhound Lines, a bus transportation company. Financial terms weren't disclosed.
- Oak Street Health (NYSE: OSH) acquired RubiconMD, a health tech company. Financial terms weren't disclosed.
- Revolut acqui-hired Wanted, a French talent sourcing marketplace. Financial terms weren't disclosed.
- Kakao Pay, a South Korean payments company, raised $1.3 billion in the country in an offering of 17 million shares priced at $76.5 a share, per Bloomberg. It had previously planned to price shares at up to $81.6 per share. Communications company Kakao owns a majority stake in the company, and Ant Group backs the firm.
- Aris Water Solutions, a Houston, Tex.-based environmental infrastructure and solutions company, raised $229 million in an offering of 17.7 million shares priced at $13 per share—it had previously planned to price shares at up to $18. The company reported $171 million in total revenue in 2020 and net income of $7,000. ConocoPhillips, Trilantic Capital Partners, Yorktown Partners, and HBC Investments back the firm.
- Evotec, a German drug discovery and development company, filed for an IPO in the U.S. The company posted revenue of $583 million in 2020 and net income of $7 million. Novo Holdings, Mubadala Investment Company, and T. Rowe Price back the firm.
- Xilio Therapeutics, a Waltham, Mass.-based cancer treatment company, raised $118 million in an offering of 7.4 million shares priced at $16 per share. The company reported a net loss of $55 million in 2020 and has yet to generate revenue. Atlas Ventures, F-Prime Capital, Bain Capital Life Sciences, and Deerfield Management back the firm.
- Minerva Surgical, a Santa Clara, Calif.-based uterine healthcare medical technology company, raised $75 million in an offering of 6.3 million shares priced at $12 per share. The company reported revenue of $38 million in 2020 and a net loss of $18 million. New Enterprise Associates, Boston Scientific Corporation, and Versant Venture back the firm.- Austin Gold, a Canadian gold exploration company, filed for an IPO in the U.S. The company reported a net loss of $1.7 million in 2020 and has yet to post revenue.
- Pantheon closed Pantheon Secondary Opportunities Fund with $624 million.
- Summa Equity added Matthias Fink as a partner.