WeWorks Adam Neumann loaned money to Faraday Grid CEO who was fired
WeWork’s former CEO Adam Neumann loaned money to a British startup boss who was later fired from his company over allegations of gross misconduct, according to documents obtained by Business Insider.
Neumann initially invested $30 million in the UK energy technology startup Faraday Grid in January, while he still the chief executive of the office-rental business.
According sources and documents obtained by Business Insider, Neumann also personally loaned $110,000 to Faraday Grid CEO Andrew Scobie through his family office 166 2nd.
Neumann made a number of startup investments as his net worth soared alongside WeWork’s valuation. WeWork’s botched IPO then triggered a sharp reappraisal of WeWork’s value, pushing banks that made a large loan to Neumann to consider new terms.
The existence of the loan raises questions as to whether Neumann made other personal loans to people and how his investments and loans may have influenced his personal finances.
Scobie was fired from Faraday Grid over allegations of gross misconduct in June. He told Business Insider that his legal challenge against the dismissal was curtailed by Faraday Grid’s collapse in August.
WeWork’s scandal-hit founder Adam Neumann invested in a British startup early this year, then personally loaned money to its CEO, who was fired months later over allegations of gross misconduct.
Neumann initially made a publicly disclosed equity investment of £25 million ($30 million) into the UK energy-tech company Faraday Grid in January. That investment would eventually be managed through his family office, which looks after 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 it was working on a new type of transformer, with the goal of boosting grid operators’ capacity to handle renewable energy. The company demonstrated a prototype in spring but had yet to formally launch the system with customers. Its other major investor was Amp, a Canadian clean-energy company.
But the relationship with Neumann went further than a standard investment, according to documents obtained by Business Insider and sources with knowledge of the matter.
Neumann separately loaned money to Andrew Scobie, Faraday Grid’s UK-based chief executive. That loan would again be managed through his family office, according to the documents seen by Business Insider. Neumann’s family office is called 166 2nd Financial Services, named after the New York building where he and his wife, Rebekah, once lived. The loan, which has not been previously reported, was agreed on some time earlier this year.
Neumann has personally invested in a number of startups with his WeWork wealth since 2013, also backing 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 superfood startup called Laird Superfood, which sells “performance mushrooms” among other things. His family office 166 2nd is run by the former General Catalyst investor Ilan Stern.
166 2nd Financial Services declined to comment.
Asked about the loan, 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 its own legal remedies arising out of the Faraday situation, and therefore won’t be commenting at this time, except to say that it is satisfied its nominees on the Faraday board acted prudently and appropriately at all times.”
According to the documents, Neumann loaned £90,000 ($110,000) to Scobie through the family office. The loan came after Scobie separately borrowed a similar amount directly from Faraday Grid.
The documents and three sources with knowledge of the matter said Scobie borrowed money from Faraday Grid to refurbish his house, and they detailed further expenditures on antique books, custom suits, and lavish outings at hotels and restaurants using company money.
According to the documents, the loan from Neumann was intended to pay back this earlier debt, but that didn’t happen. The documents, dated July, said Scobie still owed the cash to Neumann’s family office.
It’s not clear if Neumann has ever made personal loans to other people, or how these may have influenced his personal finances. A spokesperson for the executive did not immediately respond to Business Insider’s request for more information.
The loan is small compared with the $12.8 billion raised by WeWork and the millions borrowed by Neumann. But the initial investment and subsequent loan will raise further questions about Neumann’s financial judgement.
Revelations of the loan could be awkward for Neumann, given that Scobie was fired from Faraday Grid after he was accused of gross misconduct in June over the money he borrowed from the company and employee allegations that he swore at staff.
Scobie hired lawyers to challenge his firing, but Faraday Grid collapsed into administration before he could take further action. Administration is the UK’s approximate equivalent of bankruptcy. Faraday Grid collapsed in August, on the same day WeWork filed 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 acknowledged in emails to Business Insider that he borrowed money from Faraday Grid to refurbish a property but said this was “approved and encouraged” by the board. He said he repaid the other expenses.