Sources: SoftBank urges WeWork to cancel IPO following cool reception from investors, amid fears it could affect SoftBank's Vision Fund fundraising efforts

SoftBank, the biggest outside shareholder in WeWork, is urging the lossmaking property group to shelve its hotly anticipated initial public offering …

Financial Times 2019-09-10

Context & Ripple Effects

The IPO push was already fragile before today: Vision Fund investors led by Saudi Arabia and Abu Dhabi had voiced concerns about Masayoshi Son's plan to take a majority stake in WeWork, and SoftBank had already scaled back fresh investment plans from $16B to $2B by January. With investors balking at the offering, SoftBank's calculus is now defensive — the biggest outside shareholder wants the listing pulled to protect its own fundraising machine.

What makes this more than a delayed deal is that SoftBank's exposure is two-sided: it is both WeWork's dominant private backer and the manager raising capital for the Vision Fund, so a botched IPO damages both positions at once. The later arc — an $8B rescue package giving SoftBank an 80% stake, new governance standards imposed after the collapse, and a WeWork lawsuit over the abandoned $3B tender offer — traces directly back to this decision point.

First-order effects

WeWork, a lossmaking company that needed the listing to fund itself, is pushed back into full dependence on SoftBank for capital, deepening the very concentration of control its outside investors had already objected to.

Second-order effects

SoftBank's own fundraising becomes the casualty: every dollar and credibility point spent propping up WeWork is a dollar and a credibility point not available for the Vision Fund's next raise with Saudi and Abu Dhabi money.

Third-order effects

The pattern ends the era of founder-controlled mega-startups on SoftBank's watch — the governance limits Son later imposes on portfolio companies are a direct admission that concentrated founder control, not just WeWork's losses, broke the model.

The trend: The WeWork IPO collapse marks the moment private-market mega-valuations stopped being able to pass their losses to public investors, forcing SoftBank to internalize them and rewrite its governance playbook.

Discussion

@lesliepicker Leslie Picker on x
WeWork's trouble raising capital in an IPO could spill over and cause trouble for SoftBank raising capital for its new Vision Fund, @FT reports. And that's causing SoftBank to urge WeWork to cancel the IPO https://www.ft.com/...
@jason @jason on x
This is good advice from @masason; clean up your house @WeWorkAdam — sell the G650, stop the self dealing and discontinue the shenanigans. You're making all startups and the investment community look ridiculous. https://www.ft.com/...
@glcarlstrom Gregg Carlstrom on x
Perhaps the Saudi sovereign-wealth fund should have been a bit more cautious about plowing $45bn into tech startups whose main accomplishment is burning cash at eye-popping rates? https://www.ft.com/...
@danprimack Dan Primack on x
As we reported last Friday, the BIG valuation from earlier this year was viewed by some as a marketing strategy for Vision Fund II. https://www.axios.com/... https://twitter.com/...
@thorntonmcenery Thornton McEnery on x
tfw your drunkest friend wants you to get sober https://www.ft.com/...
@scottmonty Scott Monty on x
A valuation <$20B would be an even steeper drop from the $47B mark where We last raised private capital. It would be particularly painful for investors who have given or committed over $10B since We's founding. ⁦@profgalloway⁩ called it. https://www.wsj.com/...
@lisaabramowicz1 Lisa Abramowicz on x
If WeWork were to shelve its IPO, as its biggest investor SoftBank apparently wants, it may have to dramatically change its strategy, including its aggressive expansion that has seen it open 528 locations in more than 110 cities. https://www.ft.com/...
@alialsalim Ali Al-Salim on x
More problems for the Vision Fund Hard to see how conflict between founders/early stage investors and late stage investors is good for a business https://www.ft.com/...
@ttmygh Grant Williams on x
Riddle me this: If WeWork's PUBLIC valuation turns out to be 30-40% of its last ‘valuation’ in PRIVATE markets, what does the toppling of that particular domino lead to...? $WeWork https://twitter.com/...
@jason @jason on x
It's time for austerity measures in Silicon Valley — starting with @WeWorkAdam No more bulls@#%t! WeWork bought a G650 jet ($60M!!!) before they hit profitability?! While Adam did all this self-dealing bullsh@#$t with the brand name and buildings. Who is mentoring this kid? https…

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