Sina Technology News Beijing time on October 16 afternoon news, a few years ago, WeWork co-founder Miguel McKelvey (Miguel McKelvey) ignored the initial public offering proposal, and a small gathering in Napa Valley, California It is stated that the joint office company "is considering how to delay this possibility as much as possible".
The Softbank Group is ready to help WeWork and other multi-billion dollar Silicon Valley start-ups postpone the IPO.
Softbank Corp. Group of Japan is in talks to buy a majority stake in WeWork for $15 billion to $20 billion, according to people familiar with the matter, making it the biggest start-up investment ever made by Softbank Corp.. If all of the money comes from the vision fund, that would be about 1/4 of Softbank Corp. 's $92 billion vision fund. The amount nearly doubled from the largest previous venture-backed private-equity investment.
People familiar with the matter said that negotiations were still under way and that there might be other developments. But if Softbank Corp. were to take a majority stake through a vision fund, the move would no doubt keep the eight-year-old WeWork private for the next few years.
Ever since Softbank Corp. set up a vision fund focused on investing in the technology industry last year, Softbank Corp. has been restructuring the venture capital industry by investing tens of millions or even billions of dollars in startups. Instead of the money that was supposed to be raised through IPO. But Softbank Corp. 's practice of holding a majority stake will greatly prolong the time for companies to remain private.
Vision funds, which are mainly invested by Softbank, Saudi Arabia and Abu Dhabi's wealth funds, usually participate in the financing of the later stage of the start-up development — usually when the start-up is ready to go public — and will buy shares from early investors who usually sell shares in the IPO.
Investors in Silicon Valley can't help joking that " Softbank is a new IPO". Others named Softbank's investment after Masa Yoshi Son, Softbank's founder and chief executive, calling it " Masa - PO".
Some start-ups with Softbank investments " will go public when they feel they are ready — not obliged". Rett Wallace, chief executive of Triton Research, a technology company analysis firm, said.
Very few companies can get 1 billion US dollars or more. According to a survey by research institute Pitch Book, only 22 private venture-funded companies in the United States have raised more than $ 1 billion from Softbank or other investors.
Outside of WeWork, Softbank usually holds about 20% to 30% of the shares, but does not acquire a controlling stake.
Mr son has traditionally encouraged companies to "think more about the landscape" and accept more than the initial plan to raise money to boost business growth. January 2016, before investing in WeWork, Mr son also berated chief executive Adam Neumann (Adam Neumann) for being too slow.
Large investments such as those currently being negotiated with WeWork could give Softbank Corp. greater influence in business. Early investors may be able to cash out their shares, while WeWork will be able to secure a stable source of funding, leaving the company without having to consider entering the open market as soon as possible.
We Work and Softbank spokesmen declined to comment.
Paul (Paul Hsiao), a partner at venture capital firm Canvas Ventures, said "we are witnessing structural changes" to keep the company private for a long time. Paul said that Mr son looked at the issue from a long-term perspective and that he "did not consider withdrawing capital, so it is the philosophy of a holding company to do things."
Strategies to extend the privatization time of start-ups are also accompanied by some risks. Executives who took Softbank's investment said that Softbank would often urge its investment companies to focus on investing in marketing and sales to gain market share. For companies that are not yet profitable, it means more losses, and many companies that have not yet verified the business model can only follow the idea of Softbank.
Eric Wu, chief executive officer of OpenDoor Labs, a property trading start - up, said Softbank had recently invested $ 400 million in the company to accelerate its development. OpenDoor Labs now open every month in a new city, before every two months. Shortening the time interval means spending a lot of money.
When Social Finance, an online lending start-up, made a $1 billion investment in 2015 from Softbank Corp. and other investors, then CEO Mike Cagney (Mike Cagney) said the money would allow the company to delay its IPO indefinitely. "the company doesn't have to go public in a hurry." SoFi's new chief executive, Anthony Norto (Anthony Noto), said at a meeting in June that IPO was "definitely not a top priority for SoFi".
While the influx of money from Softbank Corp. and other late-stage investors has heightened concerns about the tech bubble, it also means that rather than investors in the open market, Softbank Corp. is taking these risks.
The WeWork investment was pending at a time of growing diplomatic squabbles between the West and Saudi Arabia, which financed Softbank Corp. 's vision fund. Numerous businesses and investors have recently started to distance themselves from Saudi Arabia after Saudi journalist Kashuji disappeared in Turkey and could be killed. If Softbank Corp. completes the deal through the vision fund, that would mean Saudi Arabia is indirectly the biggest investor in WeWork, where WeWork recently advocated a ban on meat and a program to hire refugees.
Masayoshi Son, 61, said he also wanted to create the second, third and fourth vision funds and realized that he had not yet consolidated his wealth. " I could have done more. I still have a lot of regrets. " He said. At the quarterly conference call held on the eve of his 60th birthday last year, he said that if he scored 100 points, he would only give himself 28 points. ( Mangli )