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Perhaps you have not yet heard of a “co-working” community, but WeWork, the pioneer of the concept that links entrepreneurs and small businesses with open office spaces, is well on its way to becoming one of 2017’s marquee “unicorn” IPOs.
Fortune’s list of unicorns—private companies valued at over $1 billion—is full of familiar names, including Uber, Airbnb, Snapchat, and SpaceX. Nevertheless, WeWork, with a valuation that has climbed well over $15 billion in 2016, sits at #13 on the list and is perhaps the most innovative of its unicorn peers.
How It Works
WeWork provides shared workplaces for entrepreneurs, freelancers, startups, and small businesses. A WeWork membership includes access to the shares spaces, as well as insurance plans, an internal social media network, workshops, and an annual retreat.
The business model is relatively simple. WeWork takes a lease out on floors or wings of buildings, chops them up into different sections, and rents them out through several different plan types. Members can choose between private offices, private desks, or simply access to the building and a shared area to work.
According to its founders, the company was born out of the aftermath of the 2008 economic crisis. There was an abundance of empty office spaces and smaller companies that couldn’t afford their own buildings, and WeWork brought the two together.
Investors and Valuation
The company was described by Forbes as 2015’s “fastest growing lessee of new space in America” and it has been steadily racking up private investors since its founding in 2010. Following the completion of its latest round of funding in October 2016, WeWork has raised over $1.7 billion in private capital.
In March 2016, WeWork received $430 million in funding from Legend Holdings and Hony Capital Ltd., which brought its valuation up to a staggering $16 billion. Since then, it has raised an additional $690 million from Shanghai’s Jinjiang International Hotels. Other investors include JPMorgan Chase (JPM - Free Report) , T.Rowe Price (TROW - Free Report) , Goldman Sachs (GS - Free Report) , and several other investment firms.
The Future
Looking ahead, WeWork will look to continue to grow its network of 30,000+ members by expanding its open office spaces. The company currently has workplaces in 19 American cities, as well as 12 foreign countries, with offerings in India coming soon.
WeWork is also testing out its WeLive concept, which brings a “co-living” philosophy into the world of residential real estate. The idea is the same, but instead of office spaces, WeLive links tenants with living areas that share kitchens and bathrooms. According to leaked company documents, WeLive is expected to bring in about 21% of the company’s total revenue by 2018.
In the meantime, the company could be gearing up for an IPO as early as the first half of 2017. If analysts are to be trusted, WeWork is aiming to greenlight the IPO if it sees a $1 billion run rate early in the year.
For more on the sluggish 2016 IPO market and some idea s on what’s coming next in the world of IPOs, check out this exclusive interview from the Zacks Friday Finish Line team and Kathleen Smith, the founder of Renaissance Capital:
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Will WeWork Be 2017's First Unicorn IPO?
Perhaps you have not yet heard of a “co-working” community, but WeWork, the pioneer of the concept that links entrepreneurs and small businesses with open office spaces, is well on its way to becoming one of 2017’s marquee “unicorn” IPOs.
Fortune’s list of unicorns—private companies valued at over $1 billion—is full of familiar names, including Uber, Airbnb, Snapchat, and SpaceX. Nevertheless, WeWork, with a valuation that has climbed well over $15 billion in 2016, sits at #13 on the list and is perhaps the most innovative of its unicorn peers.
How It Works
WeWork provides shared workplaces for entrepreneurs, freelancers, startups, and small businesses. A WeWork membership includes access to the shares spaces, as well as insurance plans, an internal social media network, workshops, and an annual retreat.
The business model is relatively simple. WeWork takes a lease out on floors or wings of buildings, chops them up into different sections, and rents them out through several different plan types. Members can choose between private offices, private desks, or simply access to the building and a shared area to work.
According to its founders, the company was born out of the aftermath of the 2008 economic crisis. There was an abundance of empty office spaces and smaller companies that couldn’t afford their own buildings, and WeWork brought the two together.
Investors and Valuation
The company was described by Forbes as 2015’s “fastest growing lessee of new space in America” and it has been steadily racking up private investors since its founding in 2010. Following the completion of its latest round of funding in October 2016, WeWork has raised over $1.7 billion in private capital.
In March 2016, WeWork received $430 million in funding from Legend Holdings and Hony Capital Ltd., which brought its valuation up to a staggering $16 billion. Since then, it has raised an additional $690 million from Shanghai’s Jinjiang International Hotels. Other investors include JPMorgan Chase (JPM - Free Report) , T.Rowe Price (TROW - Free Report) , Goldman Sachs (GS - Free Report) , and several other investment firms.
The Future
Looking ahead, WeWork will look to continue to grow its network of 30,000+ members by expanding its open office spaces. The company currently has workplaces in 19 American cities, as well as 12 foreign countries, with offerings in India coming soon.
WeWork is also testing out its WeLive concept, which brings a “co-living” philosophy into the world of residential real estate. The idea is the same, but instead of office spaces, WeLive links tenants with living areas that share kitchens and bathrooms. According to leaked company documents, WeLive is expected to bring in about 21% of the company’s total revenue by 2018.
In the meantime, the company could be gearing up for an IPO as early as the first half of 2017. If analysts are to be trusted, WeWork is aiming to greenlight the IPO if it sees a $1 billion run rate early in the year.
For more on the sluggish 2016 IPO market and some idea s on what’s coming next in the world of IPOs, check out this exclusive interview from the Zacks Friday Finish Line team and Kathleen Smith, the founder of Renaissance Capital:
Stocks that Aren't in the News. Yet.
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015 with a stellar average gain of +26% per year. See these high-potential stocks free >>