According to research from Emergent, the world’s co-working memberships are expected to more than double from 1.6 million in 2017 to 3.8 million by 2020. However, the demographics of co-working have changed with freelancers making up just 39% of co-workers in 2017, compared to 80% in 2010. Co-working market leader WeWork is a favorite to go public this year.
Founded in 2010 by Adam Neumann and Miguel McKelvey in New York, WeWork provides its online network of members with a shared office space, a sense of a community, and services. It generally rents space from landlords, transforms it into a sleek, well-designed workspace with a communal atmosphere, and sublets the workstations and offices at a higher price to customers. It targets small businesses, startups, entrepreneurs, and freelancers who are too small to invest into the lease of a full-fledged office.
For a basic We membership fee of $45 per month, it offers access to events, benefits, and its digital app that allows access to its member network. It also offers Hot Desks, Dedicated desks, and Private offices, the pricing of which depends on the location. It also offers customized build outs of office spaces.
Services offered by WeWork include super-fast Internet, business class printers, private booths for phone calls, conference rooms, mail and package handling, online community managers, cleaning service, spacious and unique common areas, and other freebies like free beer, coffee, tea, and fruit water.
WeWork also offers WeWork Labs that targets early-stage startups. For the cost of a dedicated desk, it offers them mentorship, investor introductions, workshops, and Pitch Nights to guide them towards becoming a functional business.
It has also experimented with shared living spaces through WeLive where tenants are connected to living areas with shared kitchens and bathrooms.
In 2017, the company opened 90 new locations, doubled its global membership, and expanded into new cities in Latin America, Asia and Australia, and Europe and Israel. Today the company has grown to 282 rent-your-office locations in 59 cities and over 100,000 members.
WeWork is privately held and does not disclose detailed financials. But it revealed last year that it was generating revenues of $1 billion. Some leaked documents indicate that it was heading toward a profitable year in 2016. Enterprise companies with over 1,000 employees account for 30% of its revenue. Major enterprise clients include Microsoft, Salesforce, Bank of America, and HSBC.
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, J.P. Morgan Chase, Legend Holdings, and Wellington Management. Its latest round of funding was held in August 2017 when it raised $4.4 billion from SoftBank at a valuation of $20 billion. Its valuation has doubled from $10 billion in March 2016.
WeWork’s Buying Spree
Following the fund infusion, WeWork has acquired five companies. In June, it acquired construction management platform Fieldlens, followed by Israeli enterprise sales tool Spacemob, and Singaporean rival Unomy in August. In October, WeWork acquired New York City-based Flatiron School, which teaches coding and web application development. It also bought a department store on Fifth Avenue for $850 million to act as its new head office.
In November, it acquired Meetup for an estimated $200 million. Founded in 2002, Meetup facilitates offline community events for people with similar hobbies and interests. It has over 35 million members.
The company has confirmed its plans to go public but has not disclosed any timeline. Its buying spree is believed to help it scale and prepare for the IPO.
This segment is a part in the series : 2018 IPO Prospects