WeWork has frittered away $46.7 billion in value as the stock sinks below 50 cents, one of the biggest startup failures of all time, and venture capitalists haven't learned a thing
- WeWork released an embarrassing statement recently about the NYSE threatening to delist its stock.
- Beyond Softbank, several VCs still had large stakes including Benchmark and Insight Partners.
Last week, WeWork was forced to issue an embarrassing press release warning that it was in danger of being delisted from the NYSE because the stock has traded below $1 for so long.
In 2019, prior to a disastrous attempt to go public that resulted in the exodus of its flamboyant, controversial founder, Adam Neumann, WeWork was valued at $47 billion. As of Monday, with shares trading at $0.47 and a market cap of $345.7 million, the company has lost some $46.7 billion in value over four years — vanishing like a sand sculpture left in the wind.
In 2021, the company briefly looked like its fortunes could turn around. It was acquired by BowX, a blank-check special-purpose-acquisition company from Vivek Ranadivé, the founder of the software company Tibco who is perhaps better known as a former owner of the Golden State Warriors and, more recently, the Sacramento Kings. WeWork's valuation at that time was $9 billion, CNBC reported.
But WeWork crawled into 2023 so loaded with debt that it has yet to find its footing or future. Last month, it struck deals to restructure debt, cutting obligations by about $1.5 billion, and extending the due dates of other notes in an attempt to preserve cash, Reuters reported. This after it closed 40 locations in late 2022.
When a $47 billion startup shrivels so drastically, who gets hurt? The investors. In this case, Softbank has suffered the most by far. Its Vision Fund is still the largest shareholder of WeWork with over 461.5 million shares, or about 62% of the company. Softbank has been in a world of hurt over WeWork — and other missteps — for years now.
Other venture capitalists are still holding the bag, too, with significant stakes in WeWork including Benchmark, which still holds over 20 million shares, or nearly 3% of the company, and Insight Partners, which holds almost 13 million shares, or just under 2%, according to recent regulatory filings. Then there's Neumann, who owns over 68 million shares of common stock and virtually all its Class C stock — nearly 20 million shares.
While WeWork puts a bit of egg on the faces of Benchmark and Insight, it is ultimately only a spec amid what is otherwise, year after year, enviable performances. For instance, Benchmark had a big stake in Amazon's $3.9 billion purchase of One Medical, one of the few splashy acquisitions of last year. And Insight is known for its investment in winners like Databricks and SentinelOne. Benchmark, Insight, and Softbank did not immediately respond to a request for comment.
While Neumann's WeWork holdings are in sad shape now, he has already been redeemed Silicon Valley style. He's back with a new startup that raised $350 million from the VC giant Andreessen Horowitz in August, 2022 — its biggest check ever — and is back on the tech-speaker circuit. A WeWork spokesperson declined to comment but pointed to its last earnings for Q4, 2022, when it announced an 18% year-over-year increase in revenue for the quarter.
Staggering as it might seem to blow away nearly $47 billion dollars, with those kinds of repercussions, WeWork isn't a warning for most of the venture capital community. It's just a stretch and a yawn.
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