SoftBank, Vision Fund Pump $4.4B into WeWork for Asia Growth

New York-based WeWork is adding $3 billion to its war chest from Japan’s SoftBank Group and the SoftBank Vision Fund, as the world’s biggest co-working startup aims for dominance of the Asian market. The fresh infusion of capital comes on top of the $1.4 billion that SoftBank and its Vision Fund invested in WeWork since late last month to fuel the company’s growth in China, Korea, southeast Asia and Japan.

The $4.4 billion in total SoftBank-related investment marks one of the largest-ever single bets on a private company, and will help the $17 billion startup to fend off rising competitors in Asia including naked Hub, JustCo and URWork. WeWork has over 163 co-working centres worldwide, including 12 locations in Shanghai, Beijing, Hong Kong, and South Korea, after opening its first Asian centre in Shanghai last August.

WeWork Gets $4.4B Boost from Japanese Tech Giant

“Masayoshi Son is a visionary business leader and we are humbled by this strong endorsement of our mission and purpose,” said Adam Neumann, WeWork’s co-founder and CEO in a statement. “This support from SoftBank and the Vision Fund will provide even more opportunities for creators as we set out to humanize the way people work and live.”

The new $3 billion investment consists of purchases of new and existing shares of WeWork’s parent company by SoftBank and its nearly $100 billion, Saudi-backed Vision Fund. In addition to this investment, WeWork has also received $1.4 billion from the same capital partners to fund the startup’s expansion in Asia via three newly created companies: WeWork China, WeWork Japan and WeWork Pacific – which covers Southeast Asia and Korea. Each company will be controlled and managed by local WeWork teams.

SoftBank, the sprawling Tokyo-based investment house, has created the word’s largest vehicle for tech investment by raising $93 billion for its Vision Fund, targetted to reach $100 billion by the end of the year.

“WeWork is leveraging the latest technologies and its own proprietary data systems to radically transform the way people work,” said Masayoshi Son, chairman and CEO of SoftBank Group in the statement. “We are thrilled to support WeWork as they expand across markets and geographies and unleash a new wave of productivity around the world.”

As part of the deal, two SoftBank executives will join WeWork’s board of directors. The transactions are said to value the seven-year-old startup at about $17 billion, excluding the new investment, according to the New York Times.

US Startup Prepares to Ramp Up in Asia

The latest announcement by WeWork ties together and clarifies a series of statements by the company since last month. On July 17, WeWork said it was partnering with SoftBank for a 50-50 joint venture, WeWork Japan, which would launch its first centre in Tokyo early next year.

Then on July 27, WeWork revealed a $500 million investment from SoftBank Group and Hony Capital for its WeWork China vehicle. Hony Capital is the private equity arm of Beijing’s Legend Holdings, which first partnered with WeWork for its China expansion in March 2016.

Through the new vehicle, the brand plans to roll out centres in five additional mainland cities beyond Beijing and Shanghai within less than a year. To lead this expansion drive, WeWork executive Christian Lee, former head of M&A at Time Warner Cable, was shifted from New York to the company’s regional headquarters in Shanghai to take on the role of Managing Director for WeWork Asia.

Then on August 7, WeWork announced another $500 million investment for its southeast Asia and Korea expansion and said it was acquiring Singapore-based shared office provider Spacemob for an undisclosed amount. The US startup tapped Spacemob founder and CEO Turochas “T” Fuad to serve as WeWork’s managing director of Southeast Asia and appointed WeWork executive Matt Shampine to serve as general manager of Korea.

Co-Working Rivals Vie for Asian Market

The US shared office provider has opened nine centres in Greater China, with at least six more on the way, targetting a grand total of over 15,000 desks. WeWork also operates three locations in Seoul.

The company is facing growing competition from a host of locally based flexible office firms. Late last month, China’s naked Hub joined forces with Singapore’s JustGroup to create the region’s leading operator of premium co-working space, with a network of 41 centres across nine cities in six countries.

Another major WeWork rival is the similarly named URWork, a $1.3 billion Beijing-based startup created by former Vanke executive Mao Daqing. Founded in 2015, the company has a network of 88 co-working centres in over 22 cities in Greater China and Singapore and aims to launch another 160 centres in 32 cities worldwide over the next three years.