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What have investors learned from WeWork?

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PitchBook

The Weekend Pitch

October 24, 2021

Presented by RSM

(Joe Raedle/Getty Images)

After two years, several books and a deluge of hot takes, WeWork has closed the final chapter on its life as a private company.

The saga has changed how the public views high-growth companies and their investors. For those companies and firms, however, many lessons have yet to take root.

I'm James Thorne, and this is The Weekend Pitch. You can reach me at james.thorne@pitchbook.com or @jamescthorne on Twitter.

Did we learn from WeWork?

The WeWork drama resembles a Greek tragedy—hubris that led to a hero's fall. Such stories are meant to induce catharsis and show the public how to avoid similar pitfalls.

But what has changed? Some investment and management practices have been altered. SoftBank, WeWork's biggest backer, in particular has done an about-face on some of the practices that left it overexposed to and overconfident in WeWork. Its new strategy is more diversified and comes with a clearer thesis on the future of technology.

But the culture of investing that gave rise to WeWork has in other ways only deepened, from creative accounting and tech-washing to bowing down to founders. These behaviors and others threaten to result in WeWork sequels down the road.

A message from RSM

Post-merger integration considerations that shouldn't be ignored

Today's active mergers and acquisitions market shows just how valuable private equity leaders perceive these transactions to be for driving growth. Yet integrating two businesses into a single entity comes with some unavoidable—and often overlooked—hurdles.

Through integration advisory insights and case studies, RSM's e-book, 5 Post-Merger Integration Considerations That Shouldn't Be Ignored, highlights key post-merger integration issues and provides concrete ways to overcome them. Read the e-book for tips on how to:

Meet your post-merger integration workforce needs.
Facilitate the integration of people, departments and cultures.
Identify and streamline processes to build scalability, and more.

Download the e-book

Quote/Unquote

"I think that two fundamental lessons of the last few years are:

1. You can get people to buy any stock; and
2. Donald Trump can get people to buy anything."

—Bloomberg opinion columnist Matt Levine on former President Donald Trump launching a social media platform through a combination with Digital World Acquisition Corp., a SPAC that trades on the Nasdaq under the ticker DWAC.

Following the deal announcement, the stock was halted due to volatility multiple times and closed up 107% at $94.20 Friday.

Datapoints

Public listings across Europe accounted for 21% of Q3's exit value, down from nearly 40% in the first quarter. UK roofing company Marley and fitness chain PureGym are among the PE-backed companies that have shelved IPO plans this year.

Despite that shift, PitchBook senior analyst Dominick Mondesir said liquidity in the system remains high, and investors are taking a wait-and-see approach as the economy enters a new phase of pandemic recovery.

Deal Flow

Global VC investment in the EV sector hit a record $17.8 billion in the first nine months of 2021, up from $10.6 billion for all of last year.

An increasing share of capital is being deployed in startups that support the EV transition—from batteries and charging to lithium mining and fleet financing. What's next for the burgeoning industry?

Did you know ...

(Courtesy of Gorillas)

… That Berlin-based Gorillas raised $1 billion earlier this week, making it the second most valuable delivery company in Europe?

Learn more about how the startup's valuation has surged through multiple funding rounds since its launch less than 18 months ago.

Recommended reads

The dark truth behind what makes a "good" neighborhood. [Fast Company]

The Trans Europe Express of the 1960s and 1970s has recently reemerged as a possible model for the future of travel in the continent. [Bloomberg]

DuPont's factories dumped dangerous substances into the environment. So why didn't the chemical giant have to pay for the cleanup? [The New York Times]

While conventional wisdom may say that corporate VCs dislike early-stage deals and active LP positions, a recent survey from Silicon Valley Bank says otherwise. [Institutional Investor]

For years, the most active crypto investors have been firms that specialize in the sector. Now, more and more generalist VC firms in Silicon Valley are joining the game. [The Information]

A look at how China is reinventing the way the world reads. [Protocol]

This edition of The Weekend Pitch was written by James Thorne and Priyamvada Mathur. It was edited by Alexander Davis, Angela Sams and Sam Steele.

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