WeWork is having an eventful week. Its top investor, SoftBank Group Corp., which was planning on investing $16 billion in the company said it was reducing its investment to $2 billion. The smaller deal will reportedly value the company at $47 billion.
The initial $16-billion plan would have been the biggest investment thus far in a technology start-up. SoftBank has already invested over $8 billion in WeWork, with contributions from its Vision Fund, and with the latest investment, this amount comes to more than $10 billion, making it one of SoftBank’s biggest start-up investments.
The news of the reduced investment was first reported by the Financial Times. SoftBank is said to have faced resistance on the WeWork deal from its investment partners, investors and executives, who questioned the high valuation and investment amount. SoftBank’s Vision Fund will not be a part of the current $2-billion commitment.
Although WeWork was primarily focused in real estate, it was projected as a technology company and the recent declines faced by several technology stocks were also said to have played a part in the investment reduction. Some market experts have shown skepticism on private technology companies claiming their valuations are too high.
A look at some of SoftBank’s major investments
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WeWork has seen growth in revenue but its losses have been mounting as well. The company previously said that it was investing heavily in growth strategies which can be seen as a reason for its low profitability.
In a new development, WeWork decided to change its name to The We Company, according to a report by Fast Company. The We Company will have three segments – WeWork, its core office rentals business, WeLive, which will focus on residential units, and WeGrow, which will focus on schools. The company also plans to make new acquisitions and hire more people this year.