WeWork's Fall from Grace

WeWork's Fall from Grace

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  • The bankruptcy filing of WeWork Inc. marks the end of a long-running story that exposed significant flaws in the investment approach of Japanese billionaire Masayoshi Son. This episode has had a detrimental impact on his professional reputation, extending beyond the financial losses incurred. Despite the objections of his team, Son provided substantial financial support to WeWork's founder, Adam Neumann, using funds from SoftBank Group Corp. and the Vision Fund. This injection of capital led to a remarkable increase in the valuation of WeWork's co-working office spaces, reaching an astonishing $47 billion in early 2019. However, just a few months later, the public became concerned when WeWork's IPO filings revealed substantial losses and conflicts of interest.
  • The subsequent downfall of WeWork is proving costly for SoftBank, as it is facing estimated equity losses of over $11.5 billion, in addition to $2.2 billion in outstanding debt. WeWork's very public decline, coupled with the Vision Fund's substantial loss of $32 billion in the previous year, has tarnished Son's reputation as a savvy investor who previously achieved remarkable success by making an early investment in the Chinese e-commerce giant, Alibaba Group Holding Ltd.

Why it matters

Son set up SoftBank's Vision Fund in 2017 to be the world's biggest technology investor and proceeded to pour more than $140 billion into hundreds of startups. His tendency to bid up valuations and give founders more money than they asked for earned him recriminations from Silicon Valley rivals.


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