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SoftBank to Invest $4.4 Billion into WeWork

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On Thursday August 24th, Japan’s Softbank announced that it would invest $4.4 Billion into WeWork, the rapidly growing shared workspace startup. As reported by the NY Times, $3 billion will be directed towards WeWork itself, while the remaining of the $1.4 billion will work towards expanding the company’s current operations in China, Japan, South Korea and Southeast Asia. Over half of the investment will purchase newly issued stock from the company, and the rest will be utilized to buy shares from existing investors. As part of the deal, two SoftBank directors, Ronald D. Fisher and Mark Schwartz, will join the board of WeWork.

SoftBank Group, founded in 1981, is the 62nd largest public company in the world, as per Forbes. It is also the third largest public company in Japan. Softbank’s founder, Masayoshi Son, will dip into Vision Fund, the $93 billion he has raised thus far, whose backers include Apple, Qualcomm and the kingdoms of Saudi Arabia and Abu Dhabi. Over the past year, the Japanese conglomerate has poured billions of dollars around the world investing in diverse startups. He has already proved his ambition spending $32 billion last year to purchase ARM Holdings, the British semiconductor designer making chips for modern smartphones; $4 Billion in graphics chip maker Nvidia; billions of dollars in global ride-hailing businesses; and $500 million for Improbable, a British virtual reality start-up. 

Wework has been trying to score an investment from SoftBank for over a year. The fund set the value for WeWork at roughly $17 billion. WeWork has already earned the confidence of investors including Goldman Sachs, JPMorgan Chase and Benchmark, the venture capital firm.

WeWork, founded in New York in 2010, now claims about 150,000 members across its 160 locations around the globe. It has become one of the world’s fastest-growing co-working businesses. It is indispensable to companies who want flexible office space without the commitments or hassles of moving into a full office. The shared office environments include extra services like conference rooms, mail handling, dedicated front desk services, fresh coffee, phones, Wi-Fi, printers, scanners, and cleaning crews. There are even networking opportunities, happy hour events, and classes. In the U.S. the price for a “hot desk”, or a guaranteed work space in a common area, starts at $220 a month, while a private office is $400 and up per month.

In a statement Mr. Son said, “We are thrilled to support WeWork as they expand across markets and geographies and unleash a new wave of productivity around the world.” WeWork’s co-founder and CEO, Adam Neumann, said, “This support from SoftBank and the Vision Fund will provide even more opportunities for creators as we set out to humanize the way people work and live.”

By:  Shmuel Rachelov

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