WeWork's tumultuous IPO process has been a wake-up call for some investors.
WeWork has seen setbacks ahead of its widely expected IPO, which some investors say is changing the focus in other company boardrooms from “growth at any cost” to focusing on profits.
“WeWork is changing the conversation about what it means to be IPO-ready,” says Mark Goldberg, partner at Index Ventures. “The pendulum is swinging back to a focus on cash flow versus growth at all costs.”Mandel Ngan | AFP | Getty Images Sources told CNBC's David Faber earlier this week that the valuation target for the real estate company was being cut by roughly $20 billion because of weak demand. The company had been valued at $47 billion after its last private funding round. But it's still heading towards an IPO. On Friday, Faber was hearing the valuation could be $15 billion or lower.plans to list on the Nasdaq. It is also changing corporate governance to lessen CEO and founder Adam Neumann's voting power.
Many companies have had relatively easy access to funding despite the monster losses. "It was all about growth at all costs; now it's about sustainable growth," Goldberg said. Renaissance Capital looked at the companies with the biggest losses over the past two decades in the 12 months ahead of their IPO. Uber had the deepest losses of any company ahead of its IPO, according to the data, followed by WeWork in second place. All but one, a company called, which shifted its strategy from a payments company to a live gaming platform, is under water. Uber is down 25% from its IPO price, while Lyft has dropped 35%.
Columbia Business School professor Len Sherman and former senior partner at Accenture, said while he doesn't want any particular start-up to fail, WeWork's troubles could be a necessary check on venture capital valuations.
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