WeWork Had Money to Spend. Now, Several of Its Businesses Are on the Chopping Block: Term Sheet

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WeWork is putting several companies on the chopping block. 

Following weeks of turmoil, the co-working behemoth needs to cut costs. As we noted yesterday, WeWork had $2.5 billion in cash as of June 30. At the current rate of cash burn — about $700 million a quarter — it would run out of money some time after the first quarter of 2020, according to The Wall Street Journal. There are reports of mass layoffs, the sale of the company jet, and the offloading of some businesses that WeWork had previously acquired.

Over the years, WeWork has gobbled up a number of complementary startups including Managed by Q, an on-demand office services company, Conductor, a content marketing site, and Meetup, an online social networking platform. There are reports that all three could be sold off, in addition to more recent ones like SpaceIQ and Teem. 

Now, Bloomberg also reports there’s one more company at risk: the Wing, a female-focused co-working startup.

WeWork owns about 23% of the Wing, which it valued at $58.8 million as of June 2019, according to its IPO prospectus. That implies a valuation of $255.8 million for the Wing. WeWork swooped in to lead The Wing’s $32 million Series B funding round in 2017.

At the time, I asked if the startup could be an acquisition target. WeWork’s then-COO Jen Berrent said, “We’re not doing this lightly. We are doing this to produce a long-term footprint, but at the same time, we’re not saying this has to end in an acquisition in order for it to be successful.” The Wing went on to raise an additional $75 million in funding in December.

I have to wonder how WeWork decides which assets to divest. Remember when WeWork poured $13.8 million into WaveGarden, a startup that creates artificial waves up to 8 feet high for surfing at giant water facilities, in 2017? Is that one safe? Although no one was quite sure why this purchase occurred, one thing was for sure: WeWork had big money to spend. 

How quickly the tide can turn.

PS: In the midst of its cost-cutting efforts, the We Company is still throwing a party in London.

TESLA GOES SHOPPING: Tesla has acquired DeepScale, a Mountain View, Calif.-based startup that uses low-wattage processors to power more accurate computer vision. Financial terms weren’t disclosed. DeepScale had raised approximately $18.5 million in funding from investors including Point72 Ventures, Next47, Autotech Ventures, SV Angel, and Greylock Partners. DeepScale could help Tesla develop driver-assistance systems that are good enough for owners to rent them out as “robotaxis” on an Uber-like platform without drivers. Read more.

VENTURE DEALS

Relativity Space, a Los Angeles-based developer of an autonomous rocket factory and launch services for satellites, raised $140 million in Series C funding. Bond and Tribe Capital co-led the round.

Brightfield, a New York City and Washington, D.C.-based provider of a workforce-data network, raised $53 million in Series A funding. Sapphire Ventures led the round, and was joined by investors including MissionOG, CapitalOne Growth Ventures and Telescope Partners.

NoBroker, an India-based real estate property operator, raised $50 million in Series D funding. Tiger Global Management led the round, and was joined by investors including General Atlantic.

CareStack, a Florida-based cloud-based technology platform for the dental industry, raised $28 million in funding. Steadview Capital and Delta Dental of California led the round.

Digit, a San Francisco-based money management startup, raised $27.5 million in Series C funding. General Catalyst led the round.

XMOS, a U.K.-based provider of voice and music processing technology, raised $19 million in funding. Investors include Harbert European Growth Capital. 

Aero, a San Francisco-based air travel company, raised $16 million in funding. Investors include Expa and GGV Capital.

Chronometriq, a Canada-based provider of access-to-care and patient engagement tools, raised more than C$20 million ($15 million) in Series B funding. Full In Partners led the round. 

Edify Labs, a Carmel, Ind.-based software company focused on customer engagement and cross-team collaboration, raised $10 million in seed funding. 

Sleep Data, a San Diego-based sleep solutions provider, raised $6 million in funding, from HCAP Partners

Streamlit, a San Francisco-based company building custom machine learning tools, raised $6 million in seed funding. Gradient Ventures led the round, and was joined by investors including Bloomberg Beta.

BurstIQ, a Denver-based provider of secure blockchain solutions for the healthcare industry, raised $5.5 million in Series A financing. Elsewhere Partners led the round.

LEX, a New York-based commercial real estate securities marketplace available to retail investors, raised $4 million in seed funding. Greycroft and Thor Equities co-led the round. 

NOCD, a Chicago-based digital behavioral health company focused on identifying and managing people with obsessive-compulsive disorder, raised $4 million in Series A funding. Chicago Ventures led the round. 

Unagi, an Oakland, Calif.-based maker of portable electric scooters, raised $3.15 million in seed funding. Menlo Ventures led the round. 

Flockjay, a San Francisco-based online sales academy, raised $2.98 million in funding. Investors include Lightspeed, Coatue, Y Combinator, F7, SV Angel, Index Ventures, Serena Williams and Will Smith.

Autify, a Japan-based software testing automation platform, raised $2.5 million in seed funding. Global Brain, SalesForce Ventures and Archetype Ventures led the round.

​Strigo​, an Israel-based customer training management company, raised $2.5 million in seed funding. Hanaco Ventures led the round, and was joined by investors including Greycroft.

HEALTH & LIFE SCIENCES DEALS

SEngine Precision Medicine, a Seattle-based oncology company accelerating cancer drug discovery, raised $5.1 million in Series A funding. The Bangarang Group led the round. 

PRIVATE EQUITY DEALS

Arbor Investments recapitalized The Bakery Companies, a Nashville-based maker of fresh and frozen breads, baked goods and dough products for leading food service, food manufacturing and retail customers. Financial terms weren’t disclosed. 

Broadtree Partners made an investment in RedCAT Systems, a provider of human resources software. Financial terms weren’t disclosed. 

kSARIA Corporation, a portfolio company of Behrman Capital, acquired Co-Operative Industries Aerospace & Defense, a Fort Worth, Texas-based aviation & aerospace firm. Financial terms of the transaction were not disclosed.

Beecken Petty O’Keefe & Company made an investment in Midwest Products & Engineering, a Milwaukee, Wisc.-based design and manufacturing partner to healthcare and technology OEMs. Financial terms weren’t disclosed. 

RedBird Capital Partners and Reverence Capital Partners acquired Vida Capital, Inc, an Austin, Texas-based alternative asset management platform specializing in non-correlated investment strategies. Financial terms weren’t disclosed. 

22C Capital made an investment in Definitive Healthcare, a Framingham, Mass.-based data and analytics provider across the healthcare ecosystem. Financial terms weren’t disclosed. 

OTHER DEALS

Flutter Entertainment Plc will buy The Stars Group Inc (TSX:TSGI) in a $6 billion all-share deal. Read more.

IPOs

Domicil Real Estate AG, a German property firm, plans to raise 150 million euros ($164 million) in a Frankfurt IPO, Reuters reports. Read more.

HBT Financial, a Bloomington, Ill.-based bank with branches in the area, plans to raise $149 million in an IPO of 8.3 million shares priced between $17 to $19. The firm posted net interest income of $129.4 million in 2018 and income of $63.8 million. It plans to list on the Nasdaq as “HBT.” Read more.

FIRMS + FUNDS

Kimmeridge Energy Management Company, a New York-based private equity firm, raised $800 million for its fifth fund, Kimmeridge Energy Fund V.

HKW, an Indianapolis-based private equity firm, raised $365 million for its fund, HKW Capital Partners V, L.P.

Radian Capital, a New York-based growth equity firm, raised $300 million for its second fund.