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Coworking Startup WeWork all set to Secede Complete Control to SoftBank

It seems that SoftBank’s rescue operation to rescue crisis laden co-working giant WeWork is now reaching the final stage. According to reports, SoftBank has initiated talks to take complete control of the San Francisco based company. The Japanese tech congloromate is planning to spearhead a new funding round of $4-5 Bn that will eventually increase its stake to nearly 70% in the company.

Taking into account the latest $4-5 Bn funding round, Masayoshi Son’s company would have spent nearly $19 Bn on a company that is today valued measly $ 8 bn. The unprecedented crash in WeWork’s valuation obviously does little good for the reputation of Son’s company, which takes immense pride in turning little unknown companies into mammoth companies with eye popping valuations.

SoftBank’s desperate efforts to save one of its high profile portfolio companies has also come at a time when it is planning to raise mammoth $108 bn for its highly ambitious second vision fund. Industry experts claim that Japanese congloromate’s ability to pull off its second vision fund will greatly depend on its ability to steam WeWork’s widening losses.

At the time of filing for the IPO, WeWork’s consolidated net loss stood at whopping $2 Bn. The mindboggling losses coupled with absolutely no revenue to show off dented investors’ confidence. As a result, they refused to back up the company’s IPO.

Meanwhile, Adam Neumann is reportedly likely to walk out with $1.7bn payout once the upcoming round is completed. Neumann has already stepped down from its position of CEO and therefore now exerts absolutely no control over the company. Neumann’s forced exit serves the reminder of Uber’s founder and former CEO Travis Kalanick, who was also forced to quit from his founding company in the wake of growing scandals and losses.

But above all, SoftBank now has a big mountain to climb as fixing a massively loss ridden company won’t be an easy task. And with its reputation at stake, the congloromate can ill afford any further slip up in the WeWork fiasco.

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