BUSINESS / CORPORATE

WeWork accepts $9.5 billion rescue

package, with SoftBank taking 80%
stake
BLOOMBERG
 OCT 23, 2019

NEW YORK – WeWork announced on Wednesday it accepted a rescue package from
SoftBank Group Corp., its largest investor, that will give the Japanese conglomerate an
80 percent stake in the company.
The deal marks the end of an era for the troubled co-working giant, which raised money
at a $47 billion valuation in January, pulled out of a botched initial public offering attempt
last month and is now valued at less than $8 billion in the bailout.

WeWork founder Adam Neumann will leave the company’s board as part of the
package, to be replaced by SoftBank executive and newly appointed Executive
Chairman Marcelo Claure. Neumann is set to walk away from the deal with as much as
$1.2 billion in WeWork stock, a $500 million credit line from SoftBank and a roughly
$185 million consulting fee, people familiar with the matter have said. Neumann will
remain connected to the company as a board observer.

The deal with SoftBank, which includes $5 billion in new financing and an acceleration
of a $1.5 billion existing commitment, grants a reprieve to WeWork parent We Co.,
which was on track to run out of money as soon as next month. The company has been
racing to slash costs since it pulled its IPO paperwork in September, and is expected to
fire thousands of employees this month.

“This is exactly the reason why people are suspicious about actual valuations of unicorn
companies,” said Mitsushige Akino, an executive officer with Ichiyoshi Asset
Management Co. in Tokyo. “There will be a lot of SoftBank investors that will think it’s
crazy to invest this much money into one company.”

The capital infusion doesn’t give the conglomerate a majority of voting rights and
WeWork will be treated as an associate, not a subsidiary. That might allow SoftBank to
wield influence at WeWork without having to show all of its liabilities on the balance
sheet.

The SoftBank-led rescue was one of two options the WeWork board was considering to
keep the company afloat. The other was a $5 billion debt package presented by
JPMorgan Chase & Co., which people familiar with the proposal said would have been
one been of the riskiest junk-debt offerings in recent years, including $2 billion of pay-in-
kind bonds yielding 15 percent.
As part of the deal with SoftBank, the company will offer to buy as much as $3 billion
from existing shareholders, from the fourth quarter. Neumann will be allowed to sell
nearly $1 billion of stock to SoftBank, a person familiar with the matter has said. The
deal will enable him to retain his billionaire status, according to calculations by the
Bloomberg Billionaires Index.

WeWork’s arc — from being one of the world’s most highly valued startups to
surrendering much of the company in an emergency bailout — is one of the most
dramatic business disasters in recent memory. As recently as last month, the company
appeared to be headed to the public markets. But investors balked at the
company’s unusual governance structure and rapid rate of
spending. According to its IPO paperwork, WeWork lost $900 million in the first half
of this year alone.

The chilly public market reception prompted the company to oust Neumann as CEO last
month, and pull its IPO paperwork, while it tried to find a way to profitability. But making
money may prove difficult. The company considers only 30 percent of its office space to
be “mature,” which typically means generating steady revenue. It could face costs that
approach $1 billion to renovate new space it has already secured. Some leases and
projects, including one plan for a 36-story lease in a Seattle tower, were scuttled as the
company foundered.

The SoftBank deal paves the way for the conglomerate to take a larger role at the
troubled startup. SoftBank asked Claure, the former CEO of Sprint Corp., last month to
look for ways to cut costs and raise revenue at WeWork. After Neumann’s ouster,
WeWork executives Sebastian Gunningham and Artie Minson were appointed as co-
CEOs, with a similar mandate to refocus on the core business.

SoftBank had already committed more than $10 billion to the startup before the rescue
package, and owns about a third of the company. Its latest effort to shore up its troubled
investment comes at a delicate time. SoftBank is currently working to raise another,
larger version of its $100 billion Vision Fund, the massive tech fund that made bets in
Silicon Valley so large it changed the startup ecosystem. SoftBank was also an investor
in Uber Technologies Inc., which is down by more than a quarter since its May IPO

The biggest backers of the Vision Fund are reconsidering how much to commit to its
next investment vehicle as an oversized bet on WeWork sours.

Saudi Arabia’s Public Investment Fund, which contributed $45 billion to the $100 billion
Vision Fund, is now only planning to reinvest profits from that vehicle into its successor,
according to sources familiar with the talks.

Abu Dhabi’s Mubadala Investment Co., which invested $15 billion, is considering paring
its future commitment to below $10 billion, the sources said, asking not to be identified
in disclosing internal deliberations.
SoftBank’s losses from its recent investments could run into the billions of dollars.
Founder Masayoshi Son is likely to address the subject when the company reports
quarterly earnings on Nov. 6

“It is not unusual for the world’s leading technology disruptors to experience growth
challenges as the one WeWork just faced,” Son said in the statement. “Since the vision
remains unchanged, SoftBank has decided to double down on the company by
providing a significant capital infusion and operational support.”

SoftBank seen seeking to take control

of WeWork in bailout deal including
$5 billion in debt financing
BLOOMBERG
 OCT 22, 2019

SAN FRANCISCO – SoftBank Group Corp. is looking to take a controlling stake in
WeWork, according to a person familiar with the matter. The deal is said to value the
company at about $8 billion or less, said the person, who asked not to be identified
discussing private deliberations.
The plan includes an offer to buy as much as $3 billion of stock from existing
shareholders, the person said. The package is also expected to include $5 billion in
debt financing.

WeWork declined comment. CNBC earlier reported details of the deal.

WeWork had recently been considering two rescue packages — one from SoftBank and
another from JPMorgan Chase & Co. — to keep it from running out of money as soon
as next month.

The bailout underscores the rapid unraveling of the once-high-flying start-up. This
summer, WeWork appeared to be headed toward a rich initial public offering. The start-
up had amassed more than $10 billion in commitments from SoftBank. But public
investors spurned the company, which lost $900 million in the first half of this year. As
its estimated valuation cratered, WeWork last month ousted Chief Executive Officer
Adam Neumann and, eventually, pulled its IPO paperwork.

The deal could give WeWork a reprieve as it scrambles to cut costs. The company has
said it is looking to offload several of the companies it recently acquired, plans to shutter
the elementary school located in its corporate headquarters in New York and even put
its $60 million corporate jet up for sale.
SoftBank eyes WeWork rescue
valuation below $8 billion
BLOOMBERG
 OCT 19, 2019
NEW YORK/BANGALORE – SoftBank Group Corp. is assembling a rescue financing
plan for WeWork that may value the office-sharing company below $8 billion, according
to people familiar with the discussions.
The new figure is a fraction of the $47 billion valuation the startup commanded as
recently as January. The talks are fluid and the terms could change, said the people,
who requested anonymity because the discussions are private.

WeWork, reeling since it scrapped its initial public offering, has been considering
dueling plans from SoftBank and JPMorgan Chase & Co. to shore up its finances before
it runs out of cash as early as next month. The company’s board could make a decision
as soon as this weekend, according to some of the people familiar with the situation.

Representatives for WeWork and SoftBank declined to comment.

JPMorgan has been pitching investors on a $5 billion junk-debt package for WeWork.
The unsecured and secured notes portion of the bank’s plan are being offered on a
“best-efforts” basis, according to people familiar with the matter, meaning banks haven’t
committed to funding the deal irrespective of investor demand.

The bank has been sharing its proposal with about 100 investors as it
tries to line up support for what would be one of the riskiest debt offerings in recent
years, people with knowledge of the matter said earlier this week.

Uncertainty around WeWork’s future has whipsawed its bonds in recent weeks. The
debt plunged to record lows on Tuesday as the company weighed a financing package
that included debt that could yield 15 percent, only to erase those losses a day later
amid reports that SoftBank was considering a new investment. The debt currently
trades at around 85 cents on the dollar, and hasn’t been near par since before the
company pulled its IPO last month.

SoftBank, which with its affiliates already owns a little under one-third of WeWork, has
been in discussions to provide the company with $5 billion of funding in a mix of equity
and debt. The financing would come directly from the Japanese firm, rather than its
Vision Fund, a person said earlier this week. SoftBank would not amass a majority of
voting rights, though its stake would increase, the person said. Part of the package may
include non-voting preferred stock.

Part of the appeal of the SoftBank plan is the office-sharing company’s longstanding
relationship with the investment behemoth, one of the people said. At the same time it
would further dilute existing shareholders and employees — a consideration in favor of
the JPMorgan proposal.
Google snubs WeWork and signs
Toronto lease with co-working rival
IWG
BY NATALIE WONG
BLOOMBERG
 OCT 18, 2019

TORONTO – Google has walked away from a potential Toronto lease with WeWork
after months of negotiations, agreeing to take space from rival co-working firm IWG PLC
instead, according to people familiar with the matter.
Google signed a multiyear deal for about 24,000 square feet across two floors at IWG’s
Spaces location in Royal Bank Plaza, in the heart of the city’s financial district, said the
people, who asked not to be identified because the matter is private.

The tech giant had been in talks with WeWork to rent space in its planned location at
357 Bay St., the people said. It’s unclear why discussions for that site fell through.
WeWork, the SoftBank-backed startup, has been reeling since it shelved an initial public
offering and is seeking rescue financing before it runs out of cash possibly as early as
next month.

Representatives for Google, WeWork and IWG, the world’s biggest co-working provider,
declined to comment.

The deal marks another loss for WeWork as the company struggles to find its footing
after the abandoned IPO. The firm has been selling off stakes in investments, planning
far-reaching job cuts and reining in expenses. It recently scrapped a project in Seattle.

In the midst of WeWork’s turmoil, the company’s rivals — such as IWG, Industrious and
Convene — are racing to capture a larger market share, pitching themselves to tenants
and landlords as more stable providers of flexible office space.

“You have to separate the issues at WeWork from the co-working business model,” said
Tamara Lawson, chief financial officer at QuadReal Property Group Ltd., at the
Bloomberg Canada Fixed Income Conference in New York on Wednesday.

Lawson said QuadReal doesn’t have any business with WeWork but that the firm does
invest in some of its rivals, including Convene.

Google has been expanding in Toronto, and was negotiating in June to rent space at an
upcoming office development downtown, Bloomberg reported at the time. The city’s
downtown office market ranks among the tightest in North America, thanks to growing
financial-services and tech companies and a shortage of space.
SoftBank's damage from Uber and
WeWork could exceed $5 billion
BLOOMBERG
 OCT 8, 2019

Masayoshi Son’s startups have had a rough few months, from a botched initial public
offering by WeWork to a sharp decline in shares of Uber Technologies Inc.

Now analysts are beginning to calculate that the damage for Son’s SoftBank Group
Corp. will likely reach into the billions of dollars.

Mitsubishi UFJ Morgan Stanley Securities Co. cut its profit estimate for SoftBank’s
Vision Fund, its main investment vehicle, by ¥580 billion ($5.4 billion) to an operating
loss of ¥367.6 billion for the September quarter, citing declines in the stock prices of
Uber and Slack Technologies Inc. and the withdrawn WeWork IPO. It also reduced
SoftBank Group’s fiscal year operating profit by the same amount to ¥1.01 trillion.

Son is going through a particularly rocky stretch after repositioning SoftBank from a
telecom operator into an investment conglomerate, with stakes in scores of startups
around the world.

He built a personal fortune of about $14 billion with strategic bets on companies such as
China e-commerce giant Alibaba Group Holding Ltd. But the recent troubles have
weighed on SoftBank’s shares, pushing them down about 30 percent from their peak
earlier this year as investors grow skittish about startup valuations.

“Profits in the (SoftBank Vision Fund) segment may still see considerable volatility
ahead,” Mitsubishi UFJ analyst Hideaki Tanaka wrote.

In an interview with the Nikkei Business magazine, Son said he is unhappy with how far
short his accomplishments to date have fallen of his goals.

“The results still have a long way to go and that makes me embarrassed and impatient,”
Son said. “I used to envy the scale of the markets in the U.S. and China, but now you
see red-hot growth companies coming out of small markets like in Southeast Asia.
There is just no excuse for entrepreneurs in Japan, myself included. It only just began
and I feel there is tremendous potential there.”

The strategy is to invest in companies that share his vision of a world being reshaped by
artificial intelligence, he said.

WeWork and Uber may be losing money now, but they will be substantially profitable in
10 years, Son said in the interview.
 At a private retreat for portfolio companies late last month he had a different message:
become profitable soon. At the gathering, held at the five-star Langham resort in
Pasadena, California, Son also stressed the importance of good governance. Just days
later, SoftBank led the ouster of WeWork’s controversial co-founder, Adam Neumann.

WeWork chairman Marcelo Claure told staff

he's trying to clean up WeWork, after firing
13 people for abusing vendor policies
MeghanMorris

14hoursago

WeWork
 WeWork chairman Marcelo Claure said in a Thursday night memo to staff obtained by
Business Insider that 13 employees were fired for abusing its vendor selection and
management processes.
 Claure is drawing a clear line between how WeWork operated in the past and its future
under SoftBank, emphasizing that he's building "a strong culture of compliance."
 He also said layoffs will be finished in the next several weeks.
 For more stories about WeWork, click here.

WeWork chairman Marcelo Claure told staff in a memo sent Thursday evening that the
company had fired 13 employees after investigating policy abuse.

In the memo, Claure said employees from two regions – Latin America as well as US,
Canada, and Israel, which the company groups together – were terminated for abusing
"vendor selection and management processes."
Read the full memo, obtained by Business Insider, here.

"When we hear about an issue, you have my commitment that we will investigate it and
act on our findings," he wrote. "We corrected these wrongs immediately after we heard
the complaint and investigated the incidents ... We know we can build a strong culture of
compliance only if you can come forward with concerns, as our colleagues recently
did."

Claure also said layoffs would be finished in several weeks. The office
company expects to cut up to 25% of its workforce as it focuses on a path to
profitability. On Thursday, WeWork's coding bootcamp Flatiron School laid off dozens of
employees, Business Insider reported.

A WeWork representative declined further comment.

"Respect at its core"

WeWork has had past issues with employees and vendors, at least one of which led to
a lawsuit.

On Thursday, Business Insider reported that the company's IT is due for a big
overhaul. At WeWork's start, IT was led by a 16-year-old who dropped out of high
school to join the company. WeWork later sued him, alleging fraudulent
misrepresentation and other claims in a case the parties ultimately agreed to dismiss.

In Thursday's memo, Claure seemed to be distancing the company from its culture
under cofounder Adam Neumann, who was ousted in late September.

"We are a culture that believes in making the impossible possible" he wrote. "I want that
culture to continue, but always with integrity and respect — respect for the law, our
policies and, most importantly, each other."

Under Neumann, WeWork grew from an idea to 528 locations and 12,000 employees in
nine years. The
company also struggled with governance
issues and a web of conflicts of interest laid out in a mid-August filing to
go public. Investor and media scrutiny of those problems and Neumann's responsibility
ultimately led WeWork's board to oust Neumann, name two co-CEOs, and bring in
Claure.

Now, the new leadership is looking to streamline its business and cut non-core
businesses.

The company said last month that its private elementary school, WeGrow, would close
its doors at the end of the school year. Other companies under The We Company
 banner, such as its living space WeLive, have canceled planned projects in response to
the turmoil.

Here's everything we know about WeWork

leadership changes, layoffs, and more as
the co-working giant looks to right itself
BusinessInsider

Oct13,2019,9:07PM

WeWork's new co-CEOs are looking to shutter or sell off businesses, and planning massive
job cuts. We Company; Samantha Lee/Business Insider
 WeWork pulled its IPO after mulling a massive valuation cut to drum up investor
interest. Cofounder Adam Neumann is out as CEO and chairman.
 Now, WeWork's new co-CEOs are looking to shutter or sell off businesses, and
planning massive job cuts. Its new executive chairman from SoftBank is also trying to
plot a future for the coworking company.
 We're tracking what's next for WeWork after it nabbed its lifeline from SoftBank.
 Business Insider has long been tracking WeWork. You can read our stories by
subscribing to BI Prime.

Here's everything we know about what's going on inside WeWork right now:
 SoftBank bailout
 Read the email WeWork's co-CEOs sent to the troops after SoftBank brought in a new
chairman to salvage the company
 Inside WeWork's all-hands meeting, where the new chairman from SoftBank addressed
employee concerns about worthless stock options and Kanye West's 'Flashing Lights'
played
 Read the email from WeWork's new chairman where he confirms layoffs and says: What
we are lacking is focus' and 'accountability'
 SoftBank likely had the Vision Fund on its mind when it decided to rescue WeWork
 Some WeWork employees say they're outraged by the terms of SoftBank's bailout —
Adam Neumann can cash out nearly $1 billion and will also get hefty consulting fees
 WeWork CEOs tell staff layoffs are coming in leaked email ahead of decision on rescue
package

Fallout after the failed IPO

 Goldman Sachs unloaded some of its WeWork shares before its investment bankers
pitched investors on what it once considered a $60 billion-plus IPO
 Inside WeWork's troubled $850 million Lord & Taylor building: A tale of outsize ambition,
audacious renovations, and now financial worries
 WeWork's school is closing at the end of the academic year as the company ditches
passion projects to stem its huge losses
 WeWork is now is said to be talking to JPMorgan about a $5 billion credit line and could
run out of cash next month without it
 We're starting to get a sense of the damage WeWork has wrought on Wall Street, and it
could cost Goldman Sachs $264 million
 JPMorgan has a complex relationship with WeWork. Here's a sneak peak at what Wall
Street analysts will be asking when it reports earnings.
 The WeWork fiasco is making employees wonder if their shares have been set on fire.
We talked to experts who said most tech startup workers are in the dark about how
much their equity is worth.
 As WeWork bleeds cash, Bernstein lays out 4 ways the struggling company can stay
afloat
 Morgan Stanley says WeWork's failed IPO marks the end of an era for unprofitable
unicorns — and explains why it leaves the market's tech kingpins vulnerable
 WeWork's unraveling will have a chilling effect on direct-to-consumer companies, says
former AOL and Google exec and DTX Company CEO Tim Armstrong
 Silicon Valley's founder-led startups have lost their shine with IPO investors. But the
obsession with direct listings won't fix the bigger problem.
 The flopping of the IPOs: Tech's biggest investors came to San Francisco for a major
startup conference, and one topic stole the show
 Traders are piling in to short WeWork's 'house-of-cards' junk bonds — and the costs of
the bets are some of the priciest on record
 Uber and WeWork are being thrashed for pretending to be tech companies. But the VC
whose firm bet big on both startups says that argument is all wrong.
 WeWork is planning to lay off thousands — up to 25% of its employees — as its new
CEOs focus on the core business

Neumann's personal finances

 WeWork cofounder Adam Neumann personally invested $30 million in a startup and
loaned money to its CEO. Then the CEO got fired over alleged gross misconduct.
 Adam Neumann lent money to phone distributor PCS Wireless this spring, showing how
his family office is investing beyond startups
 Adam Neumann spent over $650,000 on property taxes last year — that's more than
double the median US home value
 Wall Street gave Adam Neumann up to $500 million he was going to pay back after
WeWork's IPO. Now that the offering is pulled, banks are scrambling to hammer out a
solution.

Neumann's exit
 The Kabbalah Connection: Insiders say a celebrity-centered religious sect deeply
influenced how Adam Neumann ran WeWork before its spectacular collapse
 Sex, tequila, and a tiger: Employees inside Adam Neumann's WeWork talk about the
nonstop party to attain a $100 billion dream and the messy reality that tanked it
 Governance sank WeWork from the start, a VC and Stanford lecturer says. Here's what
any founder can learn from Adam Neumann's cautionary tale.
 At least 5 longtime members of Adam Neumann's inner circle are out, but cofounder
Miguel McKelvey will remain as WeWork revamps itself
 'The power of revelation': Adam Neumann and Elon Musk show how startup founders
use the same tactics as cult leaders — and why it eventually backfires
 WeWork's board just ousted Adam Neumann as CEO — here's who the key players are
 Adam Neumann is out as WeWork's CEO, but that's no 'silver bullet': VCs and proptech
experts think it will take cutting passion projects and cleaning house to right the ship
 JPMorgan's Jamie Dimon met with WeWork's Adam Neumann this weekend to hash
out how to get its botched IPO back on track
 The relationship between WeWork CEO Adam Neumann and SoftBank's Masayoshi
Son is being tested. Here's how Neumann cultivated it in the first place.

Tanking valuation
 WeWork's competitors are scrambling to distance themselves from the co-working
giant, but many are following the same script
 WeWork cofounders Adam and Rebekah Neumann are close friends with Ivanka Trump
and Jared Kushner and invited them to Rebekah's extravagant 40th birthday bash in
Italy
 The CEO of $1 billion WeWork rival Knotel says the idea of coworking is 'over'
 Tech IPO injury report: Some of the biggest names in tech have taken a beating after
going public this year
 3 VC investors in flex-space startups slam WeWork's governance and leadership as its
valuation crumbles
 WeWork's top communications executives are jumping ship as the company struggles
to go public
 WeWork is doing increasing amounts of business with SoftBank, which is also its
biggest investor
 The history of WeWork's meteoric valuation rise — and fall
 Private wealth execs at JPMorgan and UBS told us they're lending more against private
shares. WeWork CEO Adam Neumann has borrowed from both.
 WeWork's attempt to tap junk-bond investors may not work this time: 'Their borrowing
model is seriously in question at this point'
 WeWork is preparing to move into this massive, flashy Brooklyn building as its IPO
plans crumble. We took a look inside.
 WeWork's shrinking IPO will erase billions from CEO Adam Neumann's payday, but he'll
still likely come out a multibillionaire
 Mutual funds like Fidelity's famed Contrafund have slashed valuations on their WeWork
stakes
 The CEO of coworking startup Convene is worried bad press around WeWork's model
could taint the entire flex-office industry
 WeWork says it has a $3 trillion market opportunity and has signed up only 0.2% of its
potential customers. Here's why real-estate experts say those numbers don't add up.
 Real-estate billionaire Sam Zell just bashed WeWork: 'Every single company in this
space has gone broke'

Financials and real estate

 WeWork used massive discounts — in some cases, essentially giving away space for 2
years — to try to poach customers from rivals
 WeWork says it has 527,000 'memberships,' but that's not as straightforward as it
seems
 WeWork opened 400 locations in 3 years. In some cases, it used deep discounts to
convince existing customers to relocate to help fill them.
 We got a peek at WeWork's top landlords. Here's who is most exposed to the fast-
growing, but money-losing, coworking company as it prepares to IPO.
 Here's what we know about Fibra Uno, the Mexico real estate company that's WeWork's
biggest landlord. It highlights how quickly the co-working company has been growing
overseas.
 WeWork's CFO says it will generate $2 billion in profit on the desks it's opened this
year, and it shows the importance of the 'space-as-a-service' model
 WeWork's 'entirely new, nonsense' way of evaluating its profits is eerily similar to the
tech bubble
 The past 4 years of WeWork's pre-IPO financials show just how important cash flow is
to the company's growth
 WeWork reported its financials for 2018 and both its revenue — and losses — doubled
 One of WeWork's buildings is profitable, and the company says it's a vindication of its
model
 WeWork documents reveal it owes $18 billion in rent and is burning through cash as it
seeks more funding

Coworking rivals
 WeWork is the largest 'flex-space' operator in the US — and the real estate sector is
slated to only keep its 600% boom going
 Industrious' CEO tells us why the coworking startup is ditching leases and managing
property instead. Bigger rival WeWork is eyeing a similar pivot to help erase losses
 Convene's CEO says the $500 million flex-space startup is a hospitality company that
partners with real estate, not a tech company. Here's an inside look at the company's
financials.
 Seduced by WeWork's sky-high valuation, coworking firms have multiplied. A shakeout
could see them merge, shutter, or specialize.
 Salaryo, a startup that loans people money to rent flex office spaces, just nabbed
funding. It adds another layer of financing to the world of WeWork and its rivals.

Road to the failed IPO

 WeWork might be painting itself as a tech company, but it's facing a bunch of old-school
real estate worries
 WeWork lays out its path to profitability – and most of its options involve slowing its
breakneck growth
 Here are the 5 biggest questions facing WeWork as it prepares for its IPO
 WeWork is setting up a $2.9 billion fund to buy buildings that it will lease to itself
 A top WeWork executive explains why the company doesn't have the same issues as
Airbnb and Uber
 WeWork's copresident says it's 'really just getting started' on working with Fortune 500
companies, as it files to go public

Neumann's leadership
 WeWork details CEO Adam Neumann's web of loans, real-estate deals, and family
involvement with the company
 Lots of extremely successful founders in Silicon Valley cash out early. But WeWork's
CEO pocketing $700 million is still far from normal.
 WeWork's CEO says the way it rents out office space makes companies' financials look
better. Some experts aren't sure how legitimate the pitch is.
 WeWork's CEO explains why he thinks his $47 billion company is recession-proof and
how he keeps his ego in check as a young billionaire

SoftBank's role
 Here's everything we know about how startups raise money from SoftBank's $100
billion Vision Fund
 WeWork's CEO raised $4.4 billion from a Saudi-backed fund, but said going forward
he'd consider declining investments on moral grounds
 How WeWork's CEO grew a $10 billion relationship with SoftBank CEO Masayoshi Son,
whom he calls 'Yoda'
 It took a day for WeWork's CEO to recover from the shock of a $16 billion SoftBank
investment falling apart
 WeWork and Uber are giving SoftBank a black eye, but that doesn't mean Vision Fund
II is in trouble, experts say

Deals
 WeWork's tech head explains why the office provider is buying a building access app
used by top landlords
 Here are all the wild things, from wave pools to turmeric coffee creamer, that WeWork's
surfing founder has invested in
 WeWork acquires $249 million office-services startup Managed by Q as it goes after
larger business customers
 $20 billion startup WeWork continues its shopping spree with $200 million for Meetup
 WeWork just led a $32 million funding round for a female-run startup that's basically a
social club for women
 Ex-Uber CEO Travis Kalanick Is Betting
on the Rise of ‘Ghost Kitchens’
By
Polina Marinova

November 8, 2019

Travis KalanickDAVID PAUL

MORRIS—BLOOMBERG VIA GETTY IMAGES

This article originally ran in Term Sheet, Fortune’s newsletter about deals and
dealmakers. Sign up here.

Ex-Uber CEO Travis Kalanick is back with a secretive startup already valued at $5
billion.

His new company, called CloudKitchens, builds commissary kitchens that restaurants
can use for their delivery operations. CloudKitchens also operates its own delivery-only
restaurants within those commissaries, including brands like Excuse My French Toast,
Egg the F* Out, and B*tch Don’t Grill My Cheese.

PAID CONTENT
The Tech Company Helping Female Employees Reach the Top
From Ultimate Software

Kalanick has kept CloudKitchens largely under wraps, but he’s been buying up cheap
properties across the U.S, India, China, the U.K. and elsewhere. He also capitalized the
company with $200 million of his own money, according to The Wall Street Journal, and
added another $100 million in January. Saudi Arabia’s Public Investment Fund (PIF)
poured another $400 million into his venture, bringing the total to $700 million in
funding. (My colleague Maria Aspan points out that the deal reportedly makes Kalanick
the first Silicon Valley founder to accept an investment directly from the Saudi
government since the murder of journalist Jamal Khashoggi a year ago.)

But the question more people should ask is: What the hell is Kalanick’s goal in
building CloudKitchens? And here’s where I think he’s playing some sort of 3D
chess.

Let’s look at the facts: At Uber, Kalanick oversaw the rise of Uber Eats, the company’s
food delivery unit. Eats launched about six years after Uber's inception in 2015. The
service debuted in Los Angeles, New York, and Chicago. Fast forward a few years and
today, Eats boasts $1.5 billion in revenue and serves food from more than 220,000
restaurants in more than 500 cities around the globe. It’s the bright spot in Uber’s
business.

Kalanick is betting that these non-traditional kitchens will revolutionize the food delivery
business. There are a couple of types. “Virtual restaurants” refers to real-life
restaurants that make different cuisines specifically for food delivery apps. Since 2017,
Uber has helped start 4,000 virtual restaurants exclusive to its Uber Eats app. The other
— the one Kalanick is focusing on — is “ghost kitchens,” a name for those that have
no retail presence and serve as a meal preparation hub for delivery orders. (This feature
explains it well.)

I had heard a rumor about Kalanick’s end game: build up CloudKitchens and make it
such a compelling business that Uber would have no choice but to buy it. And
then, boom, the ousted founder would be back inside the company he started. I reached
out yesterday to a source familiar with CloudKitchens to ask about the validity of this
rumor.

They told me Kalanick does want to compete with Uber — but he does not want to sell.
He wants to compete with Uber and win. And that, my friends, would be checkmate.

WE NEED YOUR HELP: We’re taking nominations of outstanding female leaders

for Fortune’s upcoming Most Powerful Women Next Gen Summit, where we
convene ascending leaders to converse about business, share advice, and connect with
one another. It’s Dec. 10-11 in Laguna Niguel, Calif. Submit your nominations here.

Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com

VENTURE DEALS

– Side, a San Francisco-based real estate brokerage, raised more than $60 million in
funding. Investors include Sapphire Ventures, Trinity Ventures, and Matrix
Partners.

– Diamanti, a San Jose, Calif.-based developer of a bare-metal hyperconverged platform

for Kubernetes and containers, raised $35 million Series C funding. Investors
include CRV, Goldman Sachs, GSR Ventures, Northgate Capital and Threshold
Ventures (formerly DFJ Venture).

– Snapdocs Inc, a San Francisco-based real estate technology platform, raised $25
million in Series B funding. F-Prime Capital led the round, and was joined by investors
including Sequoia Capital, Freestyle Capital and Founders Fund.

– Nightfall AI (fka Watchtower AI), a San Francisco and Palo Alto, Calif.-based cloud-
native data loss prevention platform, raised $20.3 million in funding. Bain Capital
Ventures and Venrock led the round, and were joined by investors including Pear VC,
Sri Viswanath, and Kelvin Beachum.

– Productiv, a Palo Alto, Calif.-based application engagement analytics company, raised

$20 million in Series B funding. Norwest Venture Partners led the round, and was
joined by investors including Okta Ventures and Accel.

– Extend, a San Francisco-based API-first company that allows merchants to offer

extended warranties as a service, raised $16.4 million in funding. GreatPoint
Ventures led the round, and was joined by investors including LightBank and Pritzker
Group VC.

– HealthCare.com, a Miami, Fla.-based provider of technology-enabled health

insurance solutions, raised $18 million in Series B funding. Second Alpha Partners led
the round, and was joined by investors including AXIS Capital and CNO Financial
Group.

– Digits, a San Francisco-based fintech startup, raised $10.5 million in Series A funding.
Investors include Benchmark.

– Mooala, a Dallas-based maker of organic, dairy-free beverages and creamers, raised

$8.3 million in Series A funding. Sweat Equities led the round, and was joined by
investors including M3 Ventures.

– Sepio Systems, a U.S.and Israel-based cybersecurity company, raised $6.5 million in

Series A funding. Hanaco Ventures and Merlin Ventures led the round, and was
joined by investors including Energias de Portugal, Mindset Ventures and Pico
Partners.

– Ash & Erie, a Detroit-based direct-to-consumer clothing startup making clothes for
shorter men, raised $1.2 million in seed funding. Irish Angels led the round.

HEALTH & LIFE SCIENCES DEALS

– eGenesis, a Cambridge, Mass.-based biotechnology company utilizing gene editing

technologies for the development of human-compatible organs, raised $100 million in
Series B funding. Fresenius Medical Care Ventures led the round, and was joined by
investors including Leaps by Bayer, Wellington Partners, ARCH Venture
Partners, Biomatics Capital, Alta Partners, and Khosla Ventures.

– Imbed Biosciences Inc, a Madison, Wisc.-based biotech company focused on

developing advanced therapies for burns, chronic ulcers and surgical wounds, raised $4
million in funding. Formidable Asset Management led the round, and was joined by
investors including WISC Partners.

PRIVATE EQUITY DEALS

– Time Manufacturing Company, a portfolio company of The Sterling Group,

acquired BrandFX, a Fort Worth, Texas-based maker of advanced composite service
bodies, line bodies, inserts, toppers and covers. Financial terms weren’t disclosed.
OTHER DEALS

– DoubleVerify acquired Ad-Juster, a San Diego, Calif.-based SaaS-based reporting

and analytics platform for digital publishers. Financial terms weren’t disclosed.

IPOs

– Cue Holdings, a Chinese digital advertising agency, is seeking an IPO next year to
raise up to $300 million to $400 million, Reuters reports. KKR backs the firm. Read
more.

FIRMS + FUNDS

– TCG, a Los Angeles and San Francisco-based consumer-focused investment firm,

raised more than $700 million for its debut fund.

SoftBank has taken serious heat for its

WeWork and Uber losses — but one Wall
Street analyst says the company will
recover from here
Daniel Strauss
Nov. 7, 2019, 02:09 PM

Reuters

 SoftBank experienced huge losses during the recent

quarter from plummeting valuations on investments
in Uber and WeWork.
  UBS analyst Kei Takahashi wrote in a note clients
Wednesday that "the worst news is out of the way" and
things could be looking up for SoftBank.
 Takahashi has a "buy" rating and a price target of 7,100
yen, or about $65, for SoftBank. That figure represents
more than a 68% premium from where shares traded
on Thursday.
 For more WeWork news, click here.

SoftBank took heavy losses in the recent quarter on struggling

investments in Uber and WeWork, but according to UBS analyst Kei
Takahashi, the company is set to bounce back.

"We think the worst news is out of the way for the time being,"
Takahashi wrote in a note to clients Wednesday. "Although it could
take some time for expectations for the [SoftBank Vision Fund]
business to recover, we expect excessive concern to gradually
dissipate."

The Japanese telecommunications giant on Wednesday posted a $6.5

billion operating loss for the July-September quarter, compared to
$6.5 billion profit during the same period last year. SoftBank
attributed the bulk of its losses to sliding valuations in equity
investments.

Takahashi said the $4.56 billion in unrealized valuation losses from

SoftBank's stakes in companies including Uber and the $3.5 billion
loss from WeWork fell in-line with UBS's expectations.

The financing SoftBank provided to WeWork should also be enough to

help the struggling company improve its cash position, he added.

"With aid in the form of $1.5bn in warrants already issued and

$5.05bn in debt, we think there should be more than enough capital to
allow free cash flow to return to the black," Takahashi said.
SoftBank slashed its valuation for WeWork to just under $8 billion as
of September 30, down from $29.6 billion as of June 30, according to
an investor presentation.

UBS has a"buy" rating and a price target of 7,100 yen, or about $65,
for SoftBank. That represents about a 68% premium from where
shares traded Thursday.