Co-working behemoth WeWork, otherwise known as the We Company, has filed confidential documents for its IPO with the Securities and Exchange Commission on Monday.
WeWork noted that its modified IPO registration with the U.S. Securities and Exchange Commission will help it choose if it is sure it wishes to end up being an openly traded company.
Established by Adam Neumann and Miguel McKelvey in 2010, WeWork is valued at $47 billion in January and has raised $8.4 billion in a mix of debt and equity financing.
WeWork is in the company of many tech unicorns with billions in funding from the SoftBank Vision Fund. Just recently, the Japanese giant eyed a majority stake in WeWork worth $16 billion, but bowed out at the last minute.
WeWork is currently London and New York’s largest private office occupier. Additionally, the company has office complex across Latin America, Asia, and Europe.
WeWork’s design continues to rely on substantial financing from personal investors, namely SoftBank, which has poured over $10 billion into the business, including $2 billion in 2019 alone. WeWork needs to plunge money into reality in some of the most pricey markets and generates income back over time as businesses and individuals pay a subscription.
WeWork joins the tech IPO rush
WeWork is tapping into the stock market at an uncertain time, as investors grow more doubtful about unprofitable IPO hopefuls venturing to raise cash in a precarious market.
Adding to the already worrisome market, other highly-anticipated public offerings have pulled away from initial predictions.
A few of them – like Uber, which on Friday reduced its IPO expectations– have even suggested that they may never make a profit. It raises the concern of how long investors will tolerate high valuations of businesses accruing tremendous losses.
In spite of this, nevertheless, a number of tech giants, including Uber and Slack, and now WeWork, are pushing forward with their aspirations.
Why SoftBank is dumping billions into unprofitable tech businesses
Japan’s SoftBank has gone from a telecom giant to being known worldwide as a powerhouse in tech investments. And its big bets on well-known firms from Uber to WeWork have made headlines across the world.
SoftBank has become the largest venture capital firm on the planet, with an overall net asset worth approximated as high as $190 billion. Masayoshi Son, chairman and CEO of SoftBank Group, has concentrated on long-term investments in tech companies which has helped him build the SoftBank Vision Fund, with stakes in Uber, Nvidia, Flipkart, WeWork, OneWeb and more.
And the man known as the “Warren Buffett of tech financial investment,” may have a good reason for his push…
Son explained, “Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector. We will further accelerate the information revolution by contributing to its development.”
SoftBank is obviously hoping for long-term profits, which is why the company is so keen to invest in unprofible companies in the short term. Though only time will tell whether the VC’s plan will pay off, all it would take is one company of Amazon-level group to make investors happy.