WeWork, once the illustrious unicorn with a staggering $47 billion valuation, has faced a dramatic downfall, cautioning the tech startup world. Founded in 2011, it amassed $8.39 billion in private funding, mostly led by SoftBank’s Vision Fund.
But since going public in 2021, WeWork’s stock plummeted 99%, erasing $9 billion in value. Bonds hit distressed levels, with 2025 unsecured notes trading at 33.5 cents. Q2 2023 revenue was $844 million, up 4% YoY, but a $400 million loss, compared to $635 million profit in Q2 2022. In contrast, turbulent pre-pandemic Q3 2019 had 94% YoY revenue growth to $934 million, yet a $1.25 billion loss.
Currently, WeWork is dedicated to enhancing real estate efficiency, reducing expenditures, and increasing membership to reinvigorate its operations. However, as the share value nears zero, the company’s shocking reversal of fate has led to a stark warning of potential bankruptcy.
In an exclusive discussion with TFN, Nick Parminter, founder of Class35, said: “WeWork has long tried to defy the rules of business and it’s catching up with them. In many respects, WeWork is a barometer for the groundedness of the venture market – just as their charlatan valuation marked the apex of reality distortion and ridiculousness, their demise marks the growing gravitational pull of business reality in venture-backed companies. It shouldn’t be a surprise to anyone that the key to running a successful property business is optimising yield by managing operating costs and retaining tenants.”
New York-based WeWork came onto the scene with a big idea: to make offices different and bring creative people together from all around the world. Adam Neumann, one of the people who started WeWork, led the way and got a lot of people excited about it. They got a ton of money from investors and became worth a lot of money. People really liked the idea of working in cool shared spaces and being part of a big group of friends. It was especially appealing to younger people who wanted more freedom and to be part of a community.
WeWork’s funding journey: A tale of valuation peaks and valleys
From its humble $1 million seed round in October 2011 to the prelude of a transformative IPO, WeWork’s funding timeline casts a spell of growth, shifting valuations, and strategic partnerships. The saga began with a modest incantation as WeWork secured $1 million in a seed round led by DAG Ventures in October 2011, concealing its initial valuation in the cloak of secrecy.
The rise begins: Series A to Series C
WeWork’s ascent continued as it unveiled its Series A in July 2012, capturing $17 million and a valuation of $97 million. The following May, the Series B emerged with a mystique, raising $40 million and lifting WeWork’s valuation to $440 million.
Unicorn ascension: Series C and Series D
WeWork crossed the fabled unicorn threshold in February 2014 with its $150 million Series C, conjuring a valuation of $1.49 billion. This momentum surged into October 2014, as WeWork’s Series D summoned an astounding $355 million, elevating its valuation to $5 billion.
Reaching new heights: Series E to Series F
By June 2015, WeWork’s reach expanded further, securing a staggering $434 million in its Series E and bestowing upon itself a valuation of $10.23 billion. The spectacle continued with a debt financing in April 2016, as Wells Fargo contributed to WeWork’s enchantments without altering its valuation.
The pinnacle beckons: Series G and IPO aspirations
In October 2016, WeWork embarked on its Series F with a flourish, accumulating $690 million and securing a majestic valuation of $16.9 billion. The allure of the visionary startup captured the attention of an undisclosed group of investors who sold $1.3 billion worth of shares to SoftBank’s Vision Fund in August 2017, leaving WeWork’s valuation untouched.
Valuations soar
SoftBank’s influence crescendoed in August 2017 with WeWork’s $1.7 billion Series G, harmonising WeWork’s worth at a remarkable $21.2 billion. The duet of insider stock sales and direct investments in January 2019 further spun WeWork’s enchantments. The stage was set for a grand overture as SoftBank orchestrated a $5 billion direct investment, unveiling WeWork’s valuation at a staggering $47 billion.
Debt financing and IPO
As May 2019 approached, WeWork continued with $110 million in debt financing, preserving its $47 billion valuation. The symphony reached its climax with WeWork’s IPO aspirations, setting the stage for a public debut of unprecedented proportions. In September 2019, a revelation dawned – WeWork sought an IPO valuation of $10 billion to $12 billion.
Lessons for tech industry: Culture and leadership: A crucial duo
WeWork’s narrative underscores the role of culture and leadership. While a founder’s vision sparks initial success, enduring triumph hinges on a culture that embraces responsibility, adaptability, and astute choices. The removal of Neumann and leadership shifts highlight the need for well-rounded leaders ready to tackle challenges.
Pragmatism in pursuit of ambition
In today’s dynamic tech landscape, WeWork’s tale serves as a reminder of balancing ambition with practicality. While innovation is key, a profound understanding of market dynamics and the readiness to pivot swiftly when needed are equally vital.
From valuations to impact
WeWork’s descent from unicorn heights presents an opportunity for growth. Tech’s essence lies in ingenuity, and WeWork’s journey can guide entrepreneurs toward ventures that leave a lasting mark. In a shifting startup realm, the lessons offer a compass to navigate beyond valuations, towards enduring success and meaningful impact.
Jonathan Bevan, CEO of Techspace, remarked on WeWork’s ascent and tribulations, stating, “WeWork’s palpable awareness reshaped the entrepreneurial and flexible workspace landscape. Striking the right balance between innovation and responsible growth is key to scaling without compromising a business’s core health.”
Reflecting on leadership’s role, Jonathan emphasised, “Leadership shapes a company’s path, but sustained success arises from collective execution. Vision matters, but the right team, investors, and culture are vital to prevent the tail from wagging the dog.”
He further noted, “WeWork’s journey teaches entrepreneurs and investors alike. While passion and calculated risks are essential, rationality in significant decisions, learning from missteps, and staying attuned to customer needs are paramount.”
