WeWork Restructures Under 'The We Company,' Announces Reduced Funding Deal From SoftBank
WeWork has received yet another multibillion-dollar investment from SoftBank, and while the number may be smaller than the company's CEO hoped, it is enough to kick-start a new era for the company.
On Tuesday, the coworking giant announced the closure of a $6B investment from SoftBank, $4B of which had previously been disclosed. The new $2B is a far cry from the $16B deal that would have seen the SoftBank Vision Fund buy out all other outside investors, a transaction that was scuttled due to a plunge in the Japanese investment bank's stock at the end of 2018, Fast Company reports.
In concert with the funding announcement, WeWork co-founder and CEO Adam Neumann revealed a restructuring of the organization. The We Company, which lists Neumann, Miguel McKelvey and Neumann's wife, Rebekah, as founders, will be the umbrella company for three separate branches: WeWork, WeLive and WeGrow.
SoftBank promised to Neumann that its pullback on the aforementioned $16B deal was not due to a lack of faith from CEO Masayoshi Son in WeWork's future, Fast Company reports. This new round of investment comes from SoftBank's own balance sheet, rather than its Vision Fund, which is largely backed by two Middle Eastern sovereign wealth funds: Saudi Arabia's Public Investment Fund and Abu Dhabi's Mubadala Investment Co.
In December, rumors suggested that the sovereign funds discouraged Son from using the Vision Fund to invest further in WeWork, doubting the company's exploding valuation. (The latest SoftBank deal now values WeWork at $47B, according to Fast Company.) Some observers and competitors also have criticized WeWork's aggressive expansion plan, which has caused the company to lose money even as it brought in over $1B in revenue over the first three quarters of 2018.
The creation of The We Company, announced on WeWork's blog, will do little to quiet those skeptics. In the blog post, attributed to the Neumanns and McKelvey, the company stated its mission to "elevate the world's consciousness."
"WeWork’s mission is to create a world where people work to make a life, not just a living," the post read. "WeLive’s mission is to build a world where no one feels alone. WeGrow’s mission is to unleash every human’s superpowers."
Adam Neumann told Fast Company that WeLive, the co-living business that has operated in fits and starts for the past few years, and WeGrow — the nascent educational arm founded by he and Rebekah Neumann that includes an elementary school and coding academy acquisition The Flatiron School — will receive renewed investment and focus in the year to come. The We Company also plans to hire 1,000 additional engineers this year and continue to acquire other companies, according to Fast Company.
The We Company has not announced any leadership positions for its three branches, nor has it addressed how some of its other ventures, such as wellness brand Rise by We and retail concept WeMrkt, will fit into the new structure. A WeWork spokesperson declined to comment on either topic.
All of this activity comes as the global economy seems perched on the precipice of the first downturn in nearly a decade, and the first in WeWork's lifetime. Despite the uncertainty that helped shrink SoftBank's latest investment and Neumann's admission that rents have declined in all but two of the markets in which WeWork operates, the company is confident that its model will still work in adverse conditions.
CORRECTION, JAN. 8, 3:15 P.M. ET: A previous version of this article incorrectly stated a future investment promised by SoftBank. This article has been updated.
