Posted on Thursday, Sep 28th 2017
According to a report by Emergent Research, the global number of co-working members are projected to grow 41% annually over the next four years through 2020. Co-working company and Billion Dollar Unicorn club member WeWork is riding high on this growth and its valuation continues to skyrocket.
WeWork was set up by husband wife duo Adam Neumann, Rebekah Paltrow Neumann, and their partner Miguel McKelvey in 2010. The company was established to provide members with access to a shared office space. WeWork typically takes office space on rent from landlords, transforms the space into a modern, well-designed workspace, and then sublets workstations and offices to its customers. It targets small businesses, startups, entrepreneurs, and freelancers who are too small to invest into the lease of a full-fledged office. Recent reports suggest that the company has a clientele of over 120,000 members accessing office locations spread across 156 locations in 15 countries.
More recently, the company has also expanded the concept of sharing office space to sharing living space with a new feature called WeLive. Like WeWork, WeLive allows its customers to share living arrangements for flexible periods ranging from a day to a year. The service is currently available only in New York and the DC area.
WeWork is also increasing focus on enterprises by offering them the ability to establish offices ranging from single-seat satellite offices to big headquarters at low prices. WeWork claims that it is able to deliver custom offices at nearly 25% discounted prices.
WeWork is not the only player in the industry, but it is by far the largest co-working vendor. There are several local players who offer a similar product. For instance, in New York Knotel is planning on growing to 50 locations this year. Recently, Chinese company UrWork also announced a tie-up with other co-working startup Serendipity Labs to open a 34,000-square-foot location in lower Manhattan. Then there is the traditional office realtor Regus that has also entered the co-working space and has opened its first Manhattan location.
WeWork operates on a subscription-based billing model. Plans start at $45 a month and allow access to events, benefits, and its digital app. More premium subscriptions allow the member with access to a dedicated desk, printing capabilities, booths for phone calls, conference rooms, mail, and package handling to name a few.
WeWork is privately held and does not disclose detailed financials. But recently, it did reveal that it was operating at revenues of $1 billion, translating to $650 per month as its average revenue per customer. It did not disclose whether it was profitable, but leaked documents revealed last year suggested that it was heading toward a profitable year in 2016.
WeWork is venture funded and has raised $9.9 billion from investors including SoftBank, Hony Capital, Fidelity Investments, T. Rowe Price, Benchmark Capital, Aleph, Goldman Sachs, Harvard Management, Hony Capital, J.P. Morgan Chase, Legend Holdings, and Wellington Management. Its latest round of funding was held in August this year when it raised $4.4 billion from SoftBank at a valuation of $21 billion. Its valuation has skyrocketed from $10 billion in March 2016.
The company hasn’t disclosed plans to list soon, but the market is hopeful that a listing is on the cards. It has recently been adding senior management to suggest a listing as well.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
Photo credit: Jambounce Music/Flickr.com.
This segment is a part in the series : Billion Dollar Unicorns
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