WeWork is making a big move to win the co-working market in China after it announced the creation of a standalone WeWork China business, backed by $500 million from existing backers SoftBank, Hony Capital and other undisclosed investors.
This fresh influx of capital is not tied to a recent $760 million financing round that closed earlier this month, at a reported valuation of $20 billion. A source close to WeWork suggested to TechCrunch several weeks ago that another financing was around the corner, and a company spokesperson confirmed today the rounds are not linked.
The dedicated China business model is something that other major U.S. firms have adopted in China, including LinkedIn, Airbnb and Uber. None have truly proven the approach so far. Uber exited China when it sold its local business to rival Didi, LinkedIn’s head of China is leaving despite some successes, while the jury is still out on Airbnb, which made its local push as recently as March.
Currently WeWork operates eight locations across Greater China, with spaces in Shanghai, Beijing and Hong Kong. It said that this money, which is only for use via its China business, would be used to expand its presence in those three cities and move into more parts of China “on an accelerated timeframe.” The company estimates that it will have 15,000 members in China by the end of this year.
“We are extremely pleased to deepen our partnerships with Hony Capital and SoftBank to bring WeWork to more locations and cities across China at an even faster pace. Since coming to China only a year ago, we’ve been able to establish a vibrant community of creators and companies — and we’ve only just begun,” WeWork CEO Adam Neumann said in a statement.
The company has picked two close allies to help it build its business in China, in the face of emerging local competitors that include Naked Hub, a company that started out in resorts but is raising $200 million to expand across Asia, and URWork.
Beijing-based private equity firm Hony Capital first invested in WeWork last year. Its other deals in China have include bike-sharing firm Ofo, while it has also done investments in the U.S. and Israel. SoftBank, meanwhile, has been linked with WeWork for some time. It January, it emerged that the Japanese firm was in talks to invest as much as $4 billion into WeWork, having previously missed the chance to participate in two past funding rounds, according to a source.
WeWork said it operates 155 physical locations in 50 cities across 15 countries worldwide. Elsewhere in Asia, it has revealed plans to move into Japan — where it is working with SoftBank — and India, while it has been linked with a move into Southeast Asia via a Singapore-based space. Speaking at TechCrunch Disrupt New York in May, WeWork CEO Adam Neumann said his company is on progress to hit $1 billion in revenue this year.
In addition, WeWork said that Christian Lee will move to become the managing director of WeWork Asia, based out of the company’s regional headquarters in Shanghai. Lee joined WeWork from Time Warner Cable in 2015 and was previously its CFO.