>Worth them pouring a few $bn more in instead of an IPO, if only to shore up faith in the rest of their portfolio?
I'd love to know how throwing good money after bad would shore up the faith in the rest of the portfolio?
"No one else wants this, but we can't afford to mark-to-market, so we're going to throw more money in with the hopes of maintaining an illusory valuation."
At the end of the day, it's a bad business. Can't fake your way out of it.
> I'd love to know how throwing good money after bad would shore up the faith in the rest of the portfolio?
I mean, I'm just throwing something out there - I can't see how they were funded in the first place...
But, there's definitely a scenario where We taking a 50% haircut after several large-scale late rounds led by one prominent fund could lead to other companies valued at a level by the same late stage fund being valued less. The optics of that to other investors, whilst common for a lot of funds, at this late stage could raise some eyebrows.
$3bn to maintain We's valuation on the private market might mitigate against several multi-$bn write downs across the portfolio, especially if they're planning IPOs as well.
No idea if it's a decent strategy, but this is VC we're talking about...
Softbank has over $10 billion of its $100 billion Vision Fund invested in WeWork.
That's a hell of a big bet. It's not hard to imagine Softbank will do whatever it can, rational or not, to try to get WeWork to a point where they can cash out.
Yes. It’s a pretty common conflict of interest between the manager of the fund (which has a strong incentive to raise new fund while they can as quickly as possible so will want to prop up any losers until the current round of fundraising is complete) and the investors in the fund (who may or may not also be invested in the manager itself).
I agree: they'll do something. But having to pour money into a company that just blew its IPO because the business is terrible...well, not sure the market as a whole can see that as anything else but "we're f-cked!"
I'd love to know how throwing good money after bad would shore up the faith in the rest of the portfolio?
"No one else wants this, but we can't afford to mark-to-market, so we're going to throw more money in with the hopes of maintaining an illusory valuation."
At the end of the day, it's a bad business. Can't fake your way out of it.