Feb 27, 2017 ยท 1 minute

Remember the absolute peak of Groupon “fastest growing company in startup history” hubris?

When some of the biggest Valley firms lined up to invest nearly $1 billion-- or “like, $1 billion” as it was called in Groupon’s press release-- in pretty much all pre-IPO funds to cash out founders and early investors. Before the company proved a disappointment? None of those investors made a dime.

We’ve been saying for a while there was no contraction in venture capital last year-- as was widely expected-- and that that was largely because the impact of foreign capital was underrated.  

Well, WeWork has proved us right. They beat Groupon. According to reports last night, SoftBank is working on a $3 billion investment in WeWork that would include $2 billion in so-called “primary” funding, and more than $1 billion in so-called “secondary funding.” That means: At leasy $1 billion of this deal will not go towards building the business at all. And, according to some reports, that secondary total could even reach $2bn. It’s gonna cash someone out at an inflated valuation of more than $20 billion. WeWork is one of a handful of decacorns, and if the reports are correct, a shit load of people are cashing out without that valuation ever getting tested in the light of day of the public markets.

Astoundingly, that’s an upround from the last valuation which we also didn’t understand. This is after the company reportedly cut projections and spending. And -- because it’s the bro-era-- WeWork has had its own labor issues and scandals to boot.

Groupon looks downright humble right about now. VC Michael Dearing didn’t mince words on Twitter yesterday: