The office-sharing company WeWork, once valued at a staggering $47 billion, recently filed for bankruptcy protection. This comes amid a tumultuous year for the company, marred with layoffs, lowered valuations, and an ongoing battle between its co-founder Adam Neumann and SoftBank, its major investor.
Just a year ago, WeWork was considered to be a leading business that was transforming the office space industry. With its corporate suites, various amenities, and its “co-working” concept, the company had enticed many to invest in its shared working spaces. But, it all turned out to be too good to be true.
It has been reported that Neumann was granted over $1 billion in equity as he was departing the company. But this was only one of many red flags that followed. Critics have claimed that the company’s losses far outweigh its revenue. In its IPO prospectus, WeWork disclosed that its operating losses for 2019 had mounted to a staggering $1.6 billion.
The bottom line is that WeWork’s incredible company valuation far outweighed its actual worth. And, as it turns out, SoftBank had invested way too much money into the company.
With the filing of its bankruptcy in Delaware, WeWork is now successfully removed from its parent company We Co. This will help them restructure its huge debt and verify the ownership of its shares.
Though it may be too late for WeWork, this news serves as a stern warning for other startups. Without carefully examining the value of a company and the viability of its plans, any aspect of funding might be an overly risky investment.
“WeWork: From a Company Valued at $47B to Bankruptcy Protection
