WeWork & # 39; s Adam Neumann loaned money to Faraday Grid CEO who got fired
- WeWork's former chief executive Adam Neumann lent money to a UK startup manager who was later fired from his company for allegedly abusive behavior, documents obtained by the Business Insider show.
- Neumann originally invested $ 30 million in UK energy start-up Faraday Grid in January 2019, while still managing director of office rental operations.
- According to sources and documents obtained by Business Insider, Neumann also personally loaned $ 110,000 to Faraday Grid's CEO Andrew Scobie through his family office 166 2.
- Neumann reported a number of startup investments whose net worth rose high alongside WeWorks appreciation. WeWork's displaced IPO then triggered a vigorous reexamination of WeWork's value, pushing banks that provided a large loan to Neumann to assess new terms.
- The existence of the loan raises questions about whether Neumann provided other personal loans to individuals and how his investments and loans may have affected his personal finances.
- Scobie got fired from Faraday Grid for alleged gross misconduct in June. He told Business Insider that his legal challenge against the termination was limited by Faraday Grid's collapse in August.
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WeWork's scandal-hit entrepreneur Adam Neumann invested in a UK startup earlier this year when personally lent money to the CEO, who was fired months later for allegedly abusive behavior.
Initially, Neumann made a public share of £ 25 million ($ 30 million) in the UK energy technology company Faraday Grid in January. This investment would eventually be managed through his family office, which safeguards his personal wealth. At the time, Neumann said of the investment: "Faraday Grid will fundamentally change the way we access and use energy in the future."
Faraday Grid claimed that it was working on a new type of transformer, with the goal of increasing grid operators' capacity to handle renewable energy. The company demonstrated a prototype in the spring of 201[ads1]9, but has yet to formally launch the system with customers. The other major investor was AMP, a Canadian clean energy company.
But the relationship with Adam Neumann went beyond a standard investment, according to documents obtained by Business Insider and sources with knowledge of the case.
Neumann separately lent money to Faraday Grid's UK-based CEO Andrew Scobie. That loan would again be managed through his family office, according to documents seen by Business Insider. Neumann's family office is called 166 2nd Financial Services, named for the building in New York where he and his wife Rebekah once lived. The loan, which has not been previously reported, was agreed somewhat early in 2019.
News of the loan sheds new light on the types of investments and financial agreements that Neumann struck as laid off as CEO of WeWork in September after the office rental company curtailed its public flow from concerns about its business model, internal culture and corporate governance.
Neumann has personally invested in a number of startups with the WeWork wealth since 2013, and has also supported Pins, Feature.fm, Tunity, Selina, EquityBee, InterCure and Hometalk, according to Crunchbase. Through WeWork, he invested in a wave pool startup called WaveGarden and a super-food startup called Laird Superfood, which sells "performance mushrooms". His family office 166 2. is run by former general Catalyst investor Ilan Stern.
166 2. Financial Services declined to comment.
When asked about the loan, Andrew Scobie told Business Insider: "This is a personal matter independent of Faraday Grid, and as such, the terms are confidential."
AMP CEO Dave Rogers said in a statement: "AMP is considering their own remedies arising from the Faraday situation, and therefore will not comment at this time, except to say that it is pleased that the nominees of the Faraday Board acted reasonably and appropriately at all times. "
According to the documents, Neumann lent £ 90,000 ($ 110,000) to Andrew Scobie through the family office. The loan follows Andrew Scobie, who separately borrowed a similar amount directly from Faraday Grid.
The documents and three sources with knowledge of the case stated that Scobie borrowed money from Faraday Grid to renovate his house, detailing additional expenses for antique books, custom suits and lavish excursions in hotels and restaurants using the company's money.
According to the documents, Neumann's loan was intended to repay this earlier debt, but this did not happen. The documents, dated July, state that Scobie still owed the cash to Neumann's family office.
It is not clear whether Neumann has ever granted personal loans to other persons or how these may have affected his personal finances. An executive spokesman did not immediately respond to Business Insider's request for more information.
The loan is relatively small compared to the $ 12.8 billion raised by WeWork and the millions borrowed by Adam Neumann. But the initial investment and the subsequent loan will raise further questions about Neumann's financial judgment.
Revelations about the loan will be difficult for Neumann, given that Scobie was fired from Faraday Grid for alleged gross misconduct in June, over the money he borrowed from the company's and employee's allegations that he swore on employees.
Scobie hired lawyers to challenge his firing, but Faraday Grid then collapsed into administration before he could take further action. Administration is the UK's approximate equivalent of bankruptcy. Faraday Grid collapsed in August 2019, the same day WeWork submitted its papers to go public.
Scobie told Business Insider: "This action was in train, and my lawyers felt we had a very strong case at the time the company was put into administration. As a result, the case was never resolved."
Scobie also admitted in an email to Business Insider that he borrowed money from Faraday Grid to refurbish a property, but said this was "approved and encouraged" by the tables. He says he reimbursed the other expenses.
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