REUTERS: WeWork owner We Company may seek valuation in its upcoming initial public offering of $ 10-12 billion, a dramatic discount to the $ 47 billion valuation reached in January, people familiar with the matter said Friday.
If We Company continued its IPO at such a low valuation, it would be a significant turning point in the growth of the venture capital industry over the past decade, which has led to the rise of new start-ups such as Uber Technologies Inc, Snap Inc. and Airbnb Inc.
That would mean that We Company would be worth less than $ 12.8 billion in equity it raised after it was founded in 2010, according to data provider Crunchbase. And that would be a blow to its biggest supporter, Japan's SoftBank Group Corp, as it tries to raise $ 108 billion from investors for another Vision Fund.
Sources warned that no decision had been made and requested that they not be identified because the matter was confidential. WeWork and SoftBank did not immediately respond to requests for comment.
We Company is under pressure to continue the IPO despite its high valuation to secure funding for the operation. It leases workspace to customers under short-term contracts, although it pays rent in the form of long-term leases.
Investors have expressed concern about the US office-based start-up business model, based on a combination of long-term debt and short-term income, and raised questions about how it would respond to the economic downturn.
Negotiations by We Company show that it is not convinced that the changes in corporate governance announced Friday, a slight loosening of CEO and founder Adam Neumann in the company, are enough to raise investors' concerns that the company is not on the path to profitability.
The WeWork brand is closely linked to Neumann, a burning, freewheeling 40-year-old Israeli-born who has said that We Company's mission is to "raise awareness in the world." His wife, Rebekah Neumann, is the brand leader and a strong person within the company.
The changes in We Company's corporate governance system are largely symbolic and are intended to demonstrate that We Company is listening to investors after forcing it to lower its IPO price expectations, said corporate governance experts. Last month, it considered a $ 20 billion IPO.
"This change is seemingly cosmetic in nature," said Charles Elson, professor of business administration at the University of Delaware, referring to a statement by We Company that it would reduce Neumann's voting power. "He still controls the composition of the government."
An office-sharing startup said it would make changes "in response to market feedback". It said that Neumann's overwhelming voting shares would be reduced to 10 out of 20, even though he would retain a majority stake in the company.
Neumann also gives the company a profit from the real estate transactions he has made with We Company. He also limits his ability to sell shares during the second and third years after the IPO to a maximum of 10 percent of the stock.
None of the Neumann family members are on the board of directors and all successors are selected by the board. His wife and founder Rebekah Neumann are planning a plan to choose a successor.
We Company also announced that it intends to list the shares on the Nasdaq Stock Exchange. It plans to complete the IPO this month, and the IPO investors' science show could begin as early as next week, Reuters has announced.
This is another attempt to repair damage to the corporate image among investors. Earlier this month, it added a new member, Frances Frein, to the entire male party government, saying Neumann would refund a $ 5.9 million fee for using the trademarked word "Me."
"Attaching all the attention we paid to the" We Company "governance reform to" unequal voting rights "will remain firmly in place," said Glenn Davis, research director at the Institutional Investors Council.
WITH TUSS SOFTBANK
SoftBank chief Masayoshi Son has been pushing Neumann to delay the listing of We Company, but so far he has refused to convince him, Reuters has previously announced.
If We Company were to delay its listing, it would have to find loan financing to replace the $ 6 billion loan package it received through bank banks last month. This debt agreement is contingent on We Company raising at least $ 3 billion in its IPO.
One source said during a discussion Friday between Neumann and Son about whether to attend the SoftBank We Company event. The Wall Street Journal reported earlier on Friday that SoftBank is considering spending at least $ 750 million to buy IPO shares.
The last time SoftBank invested in We Company was made in January at a valuation of $ 47 billion and injected $ 2 billion into a New York startup.