Morning Markets: As JUUL and WeWork stumble, their missteps are causing financial pain amongst their backers.
As Crunchbase News reported at the time of the JUUL-Altria deal last December, the deal came after vaping company had raised lots of money from other folks.
Fidelity Investments cut the value of Contrafund’s stake in WeWork Companies Inc by 35% in September amid turmoil surrounding the office-sharing startup’s failed initial public offering (IPO).
It could affect future valuations of startups, as investors have learned a hard lesson about what companies are actually worth through the WeWork saga (i.e. they were being far too optimistic with its valuation).
It’s also a lesson that shows just because a company’s economics look good, it doesn’t mean it will be a success.