SoftBank, a Japanese multinational holding giant, is investing $3 billion in New York-based shared workspace company WeWork. The $3 billion investment is in the form of a warrant in order to buy shares before September 2019 at a price of $110 per share or higher depending on whether WeWork goes public, if it gets acquired, or raises a $1 billion round before that time, according to Bloomberg.
Based on these numbers, WeWork is valued at more than $42 billion. This means that WeWork would become the second most valuable US startup behind Uber and ahead of Airbnb.
SoftBank is currently the biggest investor in WeWork. In August, WeWork raised $1 billion from SoftBank as a convertible note. The convertible note gets converted into equity at varying share prices depending on the terms of WeWork’s next funding round.
It’s worth mentioning that this warrant comes from SoftBank rather than the SoftBank Vision Fund. So this does not affect the previous convertible note. In WeWork’s last round of funding, SoftBank invested around $4.4 billion in the company at a $20 billion valuation.
WeWork’s president and CFO Artie Minson told Bloomberg that SoftBank is the closest investor that the company has. And since SoftBank has two board seats, they can see “all the momentum” that WeWork has.
In April, WeWork said it sold $702 million in bonds rated as junk by credit agencies. For the first three quarters, WeWork lost $1.22 billion on $1.25 billion in sales. And if the company kept up the same sales pace as it did in September for the next 12 months, revenue would surpass $2 billion. Last year, WeWork lost $933 million on $866 million in revenue.