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SoftBank goes all in on WeWork

New round of funding values the co-working company at around $45B

WeWork’s Adam Neumann (Credit: WeWork)

SoftBank has committed to invest $3 billion in WeWork, valuing the company at around $45 billion, according to a report in the WSJ. If completed, the fresh funding round would make the co-working giant the second-most valuable startup in the U.S. (still behind Uber).

Worth Noting: This investment comes from SoftBank corporate, not from the Vision Fund. Still no word on earlier reports that the Vision Fund is in discussions to take a majority stake.

Selective financial reporting: The company reported earnings for its bond investors yesterday. The adjusted number wisely excludes costs such as depreciation, interest payments, and adjustments for rent incentives. Even with their very generous financial calculations, the company still showed a loss of $415 million in the first nine months of the year, nearly quadruple the $108 million it lost last year.

A clear trend: The company has shifted its focus from freelancers to businesses… In total, 29 percent of the company’s desks are now leased to large businesses, up from 20 percent last year.

Heard on the Street: Colony Capital’s Tom Barrack defended WeWork in the NYTimes yesterday. He suggests that because of WeWork’s size, “they have more power in a down market.” Meaning, in the next economic downturn, it’s possible that WeWork’s landlords will be open to negotiating lower leases instead of evicting them. Perhaps they have become “too big to fail”.

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