Co-working space startup WeWork has set up a Chinese unit, with the help of a $500 million investment from China's Hony Capital and Japan's SoftBank Group Corp, to tap into a booming demand for shared office space in the world's No. 2 economy.
The funds will be used to expand beyond WeWork's current locations in Beijing and Shanghai to at least five more large cities in the next six to 12 months, the New York-based firm's co-founder and CEO Adam Neumann said.
WeWork, which provides shared office space for users such as entrepreneurs, freelancers and large corporations, operates more than 155 properties in 16 markets including the United States, its biggest market, Canada, Germany and China.
It is generating $1 billion a year in revenue at current rates and will launch an IPO in the future, Neuman has said. Its members pay on average $650 a month.
WeWork was valued at about $16.7 billion in a funding round last year, making it, according to Hony Capital, among the world's most valuable startups.
This year, in March, SoftBank invested $300 million in WeWork, the first tranche of a funding round that could total up to $3 billion.
WeWork could unveil more units soon, CEO Neumann said, with SoftBank seen taking a stake in those businesses too. Having separate local entities in different countries gives WeWork the flexibility to take some of those units public, while keeping others under the parent, he added.
"We're not going to do too much, only in markets that are tremendously large, but in one or two more markets you're going to see us doing it, probably quite soon."
WeWork opened its first office in China in Shanghai in July 2016, expanding to four properties now, while in Beijing it has two spaces now. It also has two locations in Hong Kong. It is targeting more than ten properties in Greater China by end-2017.
Co-working space startup WeWork has set up a Chinese unit, with the help of a $500 million investment from China's Hony Capital and Japan's SoftBank Group Corp, to tap into a booming demand for shared office space in the world's No. 2 economy.
