WeWork Cos. on Thursday disclosed it raised another $1 billion in funding from SoftBank Group Corp. 9984 -0.10% , as the shared-office company continues its rapid growth by doubling revenue but piling up losses, according to newly released financial information on Thursday.
The New York-based company said its loss in the first half of the year more than tripled to $723 million from the year-ago period as it accelerates opening new spaces and spendsmore to market them. Revenue for the first half of this year more than doubled to $763.8 million.
As a private company, WeWork isn’t required to publicly disclose its financial numbers, but it released the figures to the media in tandem with a periodic update to bond investors.
WeWork, one of the world’s most valuable startups with a valuation of about $20 billion, said the new funding from its investor SoftBank came in the form of a subordinated convertible note that is structured to give the Japanese company an edge in the next fundraising round. SoftBank already invested $4.4 billion in equity funding in WeWork last August.
If SoftBank leads an equity round of at least $1 billion, the notes will convert into preferred shares at whatever valuation the investor sets. If another investor leads a funding round of $1 billion or more, SoftBank will automatically get shares that value the company at $42 billion—twice the previous valuation—or more if the shares are priced higher.
The note, which accrues interest of 2.8% a year starting next September, gives WeWork more financial power to lease and acquire new buildings while modernizing the offices with glass walls and upscale furnishings. The eight-year-old company typically has raised money through direct investments, collecting more than $6 billion, but earlier this year it raised $702 million in its first bond sale.
There are signs that WeWork’s scale is driving down costs. The company expects net construction costs per desk to fall 20% in 2018 to $4,500, after it declined 22% last year.