WeWork Cos. co-founder Adam Neumann has cashed out more than $700 million from the company ahead of its initial public offering through a mix of stock sales and debt, people familiar with the matter said. The unusually large sum given that startup founders typically wait for the IPO to monetize their holdings.
Mr. Neumann, who is chief executive of the shared office-space giant and remains its single largest shareholder, over several years has sold some of his stake in the company and borrowed against some of his holdings, the people said.
The exact size of Mr. Neumann’s current ownership in WeWork couldn’t learn. He recently set up a family office to invest the proceeds and has begun to hire financial professionals to run it, they said.
Investors in startups have generally frowned upon founders who cash out large chunks of shares ahead of a public-markets debut because it raises questions about their confidence in the company. On the other hand, people close to Mr. Neumann said, his borrowings against some of his WeWork shares indicate that he is bullish on the company’s long-term prospects.
Since WeWork was founded nine years ago, Mr. Neumann has invested heavily in real estate, spending more than $80 million for at least five homes, according to public records and people familiar with his home purchases. His other investments include commercial properties and stakes in startups, including a medical cannabis company. He has also given away more than $100 million, according to people familiar with his finances, who declined to name specific recipients.
Private companies rarely publicize disposals of stock by their top executives before making their IPO filings public. But among known instances of share sales by senior executives of a U.S. startup, Mr. Neumann’s transactions collectively rank among the largest in dollar terms.
WeWork valued at $47 billion in its latest investment round in January. It has said it filed confidentially new last year for an initial public offering of shares. The company plans to move ahead with the listing later this year or early next, people familiar with WeWork’s timing have said.
Mr. Neumann, 40 years old, has sold shares during most of the investment rounds since 2014, although he didn’t take money out in the series this past January, according to people familiar with the matter. He has also taken out loans of several hundred million dollars backed by his WeWork shares, people familiar with his finances said.
He has used some of the proceeds to purchase more WeWork shares by exercising his stock options early, some of the people said. By doing so, Mr. Neumann is betting that the value of WeWork’s shares will rise while also minimizing his taxes, the people added. The majority of his wealth remains connected to WeWork, the people said.