👉 Background: WeWork was founded in 2010 as one of the first co-working spaces with a community vibe. Think: beer and cider on tap, events in the space and of course a cult workplace. In 2019, during the boom years, WeWork managed to raise money at a valuation of $47 billion USD.

👉 What happened: But in the build up to go public in 2019, WeWork's business model came under fire. Investors saw the business' enormous losses and questionable business practices. So, WeWork finally listed in 2021 via a SPAC at a valuation of $9 billion USD - an 80% haircut to its previous valuation.

👉 What else: Now, with billions in debt and billions in losses, WeWork is expected to file for bankruptcy because the business model just isn't working.

What's the key learning?

💡When the hype fades, the financial ramifications can be severe. Hindsight is a beautiful thing, but the tech valuations from 2020 have hurt a lot of investors.

💡There have been a number of large tech companies that have seen their valuations nose-dive since 2020:

• BNPL company Klarna raised at $45.6 billion USD valuation in June 2021, and then raised at a $6.7 billion valuation just 12 months later.
• US-based grocery delivery service InstaCart raised at $39 billion USD valuation in 2021, and then listed on the NASDAQ at a $9.9 billion USD valuation.

💡 So WeWork's expected bankruptcy is a pretty stark reminder of the risks of FOMO and frothy valuations.

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