US co-working firm WeWork raises US$500 million to push ahead with China expansion
WeWork China receives series B financing from Trustbridge Partners, Temasek, SoftBank Group, SoftBank Vision Fund and Hony Capital
The China arm of US co-working space provider WeWork has raised US$500 million from a group of Asian investors to push forward its expansion in the country, the company said on Thursday.
WeWork China received the series B round financing from China’s Trustbridge Partners and Hony Capital , Singapore’s Temasek, and Japan’s SoftBank Group and SoftBank Vision Fund. The company’s China arm is worth US$5 billion, according to people close to the firm.
“This investment will help WeWork fuel our mission to support creators, small businesses and large companies across China,” said Adam Neumann, WeWork’s co-founder and chief executive. “WeWork has built an incredible team in China that supports our members every day, serving as a bridge for local companies who want to reach the world, as well as for global companies that want to enter the Chinese market.”
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Founded in 2010 in New York by Neumann and Miguel McKelvey, the fast-growing company is accelerating its China expansion and is adding new locations one by one. On August 3, its WeWork Cityplaza Three will open in Hong Kong, followed by another location in LKF Tower in the city’s Central district. New locations are due to open in Chengdu and Shenzhen on the mainland in September, followed by Hangzhou in October.
The series B fundraising is the latest effort by WeWork to secure a role in the start-up boom transforming China’s economy.
In April, it paid US$400 million to buy Shanghai-based Naked Hub, a major competitor in China, according to Bloomberg. Its domestic rivals include the rapidly expanding Sequoia Capital-backed Ucommune and KrSpace, a spin-off of Ant Financial-backed technology platform 36Kr.com. Ant Financial is an affiliate of the Alibaba Holding Group, which owns the South China Morning Post.
Since opening its first location in China two years ago, WeWork has expanded to 40 locations in Shanghai, Beijing and Hong Kong, with more than 20,000 members. It expects this number to double by the end of 2018. Learning locally is key to its success. About 95 per cent of WeWork’s China team, currently more than 550 people, are local Chinese.
WeWork boasts of more than 253,000 members worldwide, and last year reported a total revenue of US$886 million, according to Bloomberg. Yet, recent concerns have been raised over its profitability – it reported a net loss of US$933 million last year.
“WeWork has billions in cash and deep-pocketed private equity backing, but spending on its ambitious global growth plans means it is likely to be years before there are consolidated profits, or free cash flow,” Edmond DeForest, a senior credit officer at Moody’s, said in a report.