Technical Investors: WeWork's valuation play shows no broad lessons

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NEW YORK (Reuters) – Two high-tech investors warned about drawing broad conclusions on private companies' valuation of issues surrounding the start of some U. WeWork office.

PHOTO FILE: The WeWork logo is displayed on a collaborative route in New York City, New York, January 8, 2019. REUTERS / Brendan McDermid / File Photo

Scott Kupor, a management partner of $ 10 billion venture capital firm Andreessen Horowitz, said at CNBC's Institutional Investors conference, Delivering Alpha, that it would be “dangerous” generalization from the WeWork situation as it stems from the complexity of numerous factors.

Amongst those he said, there are governance issues, a “late silver, money cycle” company, and the tension between traditional real estate valuation methods and the ones that some view in Silicon Valley.

“That's what the public market investor is struggling with in these hybrid companies,” said Kupor. “How much of the business is like hardware or other business and how many have margins and moles that a technology company looks for?”

Andreessen Horowitz is not a WeWork investor.

WeWork Owner The Web Company postponed its initial public offer this month after a surplus of questions regarding its valuation. Reuters reported last week that The We Company was looking for a valuation between $ 10 billion and $ 12 billion in its IPO, a sharp discount from the $ 47 billion valuation it achieved in January.

Glen Kacher, the $ 2 billion chief investment officer of Light Street Capital Management LLC, said that rapidly changing valuations for private companies such as WeWork should not be surprising, given the prevalence of large price swings in markets. public.

“That is the market,” said Kacher, speaking with Kupor at the annual event of New York City. “I don't think it's a great thing.”

Kacher was in contrast to WeWork with Uber Technologies Inc (UBER.N), One Street Light investments.

He said that “SaaS,” or Uber software proves to be a significant value service because many customers can use their cars and drivers every day, but only one client at the same time can set a set of desktops. WeWork to use.

“That's where technology is embracing these fixed assets to create services… this is a very unique economic solution (for Uber),” he said. “Unlike WeWork, which is just at a floor carpet in very small spaces. That's their technology. ”

Kacher said he continues to find SoftBank Group (9984.T) an “interesting” investment opportunity, partly because Uber is a larger part of its portfolio than WeWork.

The head of the Securities and Exchange Commission, Jay Clayton, would not interview the stage at the conference directly on the WeWork IPO.

He said, however, that it is not "against him" for him to have different valuations in public and private markets for the same company type.

“The discovery mechanism is very different prices,” Clayton said.

Reporting by Lawrence Delevingne; Edited by Jennifer Ablan and Tom Brown

Our Standards:The principles of Thomson Reuters Trust.

. (T) Technology (TRBC) (t) Asia / Pacific (t) Real Estate Markets (t) Investment and Fund Management Operators (TRBC) (t) Private Equity Funds (t) USA

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