09 Apr 2020
Posted in Technology
WeWork debacle portends a crisis for tech unicorns, says GlobalData
Last week, GlobalData predicted SoftBank would turn off WeWork’s funding. Following the announcement that WeWork is taking its biggest investor to court, after SoftBank withdrew a $3bn capital injection;
Oliver Lockett, Thematic Analyst at GlobalData, a leading data and analytics company, offers his view on the company’s current challenges:
“Many companies will not survive the COVID-19 shakedown. It is looking increasingly likely WeWork will be one of them.
“The lawsuit is an escalation of hostilities between WeWork and its largest shareholder. The group’s occupancy rate fell from 79% in September 2019 to 64% at the start of April 2020, leaving it strapped for cash. This may only be the tip of the iceberg, as more tenants will delay payments or cancel agreements completely.
“WeWork is an archetypical hype-founded unicorn, which was once valued at $47bn. It faces the grim reality check faced by many start-ups in a trend that started before the COVID-19 pandemic struck. Venture capital is turning its back on many tech unicorns who have been founded on hype rather than a sound financial footing.”