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NY-based company offering on-demand shared workspaces gets investment from Chinese firms
What market slowdown? What dying unicorns?
WeWork, a platform for booking shared workspaces, has secured a new funding round led by Legend Holdings and Hony Capital with participation from "existing shareholders and new partners,” according to a blog post from company CEO Adam Neumann.
I’ve reached out to the company to see if they can confirm the size of the round, though the Wall Street Journal has the number pegged at $430 million. Additionally, WSJ’s sources say the company’s new round gives the company a valuation of $16 billion, a 60 percent increase on the $10 billion valuation given to the company when it raised $434 million last summer.
As can be gathered by the leaders in this new round—Legend Holdings is a Chinese investment holding company and Hony Capital is a Chinese private equity firm owned by Legend Holdings—WeWork aims to use its new funding to expand to China.
“Not only does WeWork have one of the largest addressable markets I have ever seen, but the quality of its execution and fit for the Chinese culture is unparalleled,” said Hony Capital CEO John Zhao.
Though it now has the warchest, WeWork will now have to prove that it has the business acumen and right partners to execute on this expansion. In spite of having raised even more funding than WeWork for its expansion into China, Uber has continually struggled to compete with its China-based competitor Didi Kuaidi, who Uber CEO Travis Kalanick has said is “unprofitable in every city they exist in, but they’re buying up market share.”
As such, Kalanick says Uber is bleeding over $1 billion per year in China just to compete.
There may be others, but the one China-based shared workspace company I could dig up is called UrWork. Based in Shanghai, the company just raised $32 million from Sequoia Capital, Zhenge Fund, and other VCs this past September, and has a strategic agreement with a state-owned group called Lingang.
Based on its funding and initial reports that its offering only includes 500 spots so far, UrWork may seem like a dwarf compared to the unicorn giant that is WeWork, riding over from New York. But UrWork does have home field advantage.
The broader story here is that WeWork has seemingly defied the ongoing market scare of a coming recession and a tech bubble burst not just by scoffing at the prospect of a down round, but actually by significantly increasing its valuation through its newest funding round. In that way, it has joined its sharing economy peers Uber, Airbnb, and Lyft in displaying immunity to market deflation.
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