Flexible workspace company IWG showed it has full confidence in the co-working industry, despite the industry’s recent ups and downs during the COVID-19 pandemic. The Switzerland-based company, which also owns flexible space providers Regus and Spaces, recently announced it purchased a stake in the women-focused co-working startup The Wing, Bloomberg reports.
Founded in 2016, The Wing previously secured more than $100 million in fundraising from companies such Airbnb, Sequoia Capital and fellow co-working space provider WeWork, according to Commercial Observer. The Wing currently has 11 locations in New York, San Francisco, Chicago and London.
IWG’s investment amount was undisclosed, but it is enough to give the company a majority stake in The Wing, according to people familiar with the deal. The investment is in part to help facilitate The Wing’s growth, but it also allows IWG to control another smaller rival.
“Partnering with IWG provides an exciting opportunity to expand our spaces and network designed for women during a time of increasing demand for alternative work environments in the midst of the pandemic and shifting workplace norms,” Lauren Kassan, co-founder of The Wing, said in the statement.
The COVID-19 pandemic has been unfriendly to the flexible office space industry. During standard times co-working companies had somewhat of an advantage over traditional landlords because they could offer tenants flexible, short-term leases. That benefit became a liability during the pandemic because tenants in co-working space weren’t locked into any long-term lease obligations if they decided to start working from home. Landlords and commercial real estate owners with traditional leases are still owed rent every month whether their tenants are working out of that space or not.
The Wing was no exception to the downturn during the pandemic. Bloomberg reports the flexible office space provider had to decrease its staff by during the first few weeks of the pandemic as it tried to weather the storm that came with government-mandated lockdowns. Meanwhile, WeWork, which had invested in The Wing in 2017, sold its stake in the company in 2020. The sale brought The Wing’s valuation from $365 million to approximately $200 million.
IWG’s has been aggressive in seeking control of co-working companies like The Wing. That doesn’t mean the company is immune to the financial strain the COVID-19 pandemic has caused so many businesses, however. IWG sold shares in May, has closed locations and set aside $228 million for costs related to shutting down sites, according to Bloomberg. Despite these issues, IWG is forging ahead to not only help The Wing remain financially viable, but help it accomplish its goals.
“For the past thirty years, we have been at the forefront of meeting the needs of people in a new and evolving world of work and look forward to partnering with The Wing to empower current and future generations of female entrepreneurs, providing them with a place digitally, and in person to help each other succeed professionally,” IWG founder Mark Dixon said in a statement.
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