UPDATED March 4, 2020, 1:02 p.m.: WeWork has sold a facilities management company for nearly $200 million below what it paid less than a year ago. The deal puts an end to a lengthy bidding war for the company.
Managed by Q was bought by rival startup Eden for $25 million, according to people familiar with the transaction. It’s a far cry from the amount WeWork paid for the firm last April, a $220 million cash and stock deal that included $100 million in cash.
Both Eden and Managed by Q provide software platforms that enable office managers to contract vendors — such as IT consultants and handymen — order supplies and organize events. After Eden launched in 2015, the two companies became bitter rivals and competed for customers.
Managed by Q appeared to gain an edge when it was sold to WeWork. But after WeWork abandoned plans for a public offering and its valuation dived last fall, it put Managed by Q and other startups on the chopping block. In December, Eden emerged as a bidder for the company against Managed by Q’s founder.
Dan Teran, who launched Managed by Q in 2013, offered $23 million to WeWork to buy back the company, according to people familiar with the transaction.
However, a person with knowledge of the transaction said Teran’s bid “wasn’t a viable offer because he couldn’t get the funding together.”
Teran did not respond to requests for comment.
In a statement, WeWork said the sale of Managed by Q was part of its strategy to focus on its core office-space business.
“We are grateful for the contributions of the entire team at Managed by Q and believe the company is well positioned to succeed as part of Eden,” a company spokesperson said.
Since last fall, WeWork has sold, closed or divested its stakes in at least four companies, including business management software company Teem, search optimization platform Conductor, co-working firm Spacious and women-focused co-working firm The Wing.
The acquisition of Managed by Q is a coup for Eden. Before WeWork acquired it, Managed by Q had raised $128 million from a host of prominent investors, including GV, RRE and Kapor Capital.
By comparison, Eden has raised $69 million since it launched in 2015. The startup on Tuesday completed a $29 million funding round led by JLL, which was used to fund the acquisition of Managed by Q. JLL will take a minority stake in the company.
“We liked both Managed by Q and Eden for a while, and this became an opportunity,” said Yishai Lerner, co-CEO of JLL Technologies, who will join Eden’s board. “We have full confidence in their ability to integrate Managed by Q well.”
JLL has “real skin in the game,” said Joe Du Bey, Eden’s CEO. “We are going to leverage their global presence and distribution to scale Eden even faster.”
While Du Bey declined to disclose Eden’s valuation, he said the company expects to generate north of $100 million gross revenue in 2020. He expects its employee headcount to grow to about 100, and said the firm aims to take over many of Managed by Q’s customers, including Casper and Uber, spread across 30 U.S. markets.
Du Bey said the company has no plans to become profitable in the foreseeable future, but said that it could become profitable by next year if it needed to.
“We have chosen to run the business with venture capital for the foreseeable future,” he said. “It probably isn’t in the best interest of our shareholders to manage our business that way this early in our growth trajectory.”
Correction: An earlier version of this article incorrectly stated that Meetup had been sold by WeWork. It is still owned by WeWork, which indicated in 2019 that Meetup is for sale.