Selina Beit Oren, Israel
Israeli hospitality company Selina has revealed both good and bad news. On the bright side, the firm has secured agreements for a strategic investment totaling up to $50 million led by an affiliate of Global University Systems. But at the same time, the company is laying off 350 people and closing five of its hospitality properties.
Selina is making the cuts after seeing its market cap drop by 90% since its IPO.
The first tranche of the new investment comprises an immediate $10 million in funding under a secured convertible debt instrument. After securing an additional $20 million in PIPE equity or other funding from parties other than the Investor or any of its affiliates and satisfying other funding conditions, the Investor commits to an additional tranche of $10 million via a private investment in public equity (“PIPE”) and an additional $10 million in PIPE investment and/or convertible debt.
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The arrangements also provide for an optional third tranche that includes $20 million from the Investor, consisting of PIPE investment and/or convertible debt, in each case generally on the same terms as the initial convertible debt and PIPE funding.
Should all investments be completed, including the additional $20 million in conditional funding required to unlock the second tranche of investments, Selina will have secured $50-$70 million of additional capital.
For 2022 Selina revealed a $725 million deficit against just $184 million in revenues. In October 2022, Selina completed an SPAC merger at a valuation of $1.2 billion. But now the company has a market cap of just $130 million. So, Selina seems like a WeWork knockoff, and, like WeWork, may very well be just a house of cards.
Founded in 2014 by Daniel Rudasevski and Rafael Museri, Selina says it was built to address the needs of Millennial and Gen Z travelers, blending beautifully-designed accommodation with coworking, recreation, wellness, and local experiences. Custom-built for today’s nomadic traveler, Selina provides guests with a global infrastructure to seamlessly travel and work abroad. But its business model seems to not be practical.
Rafael Museri, co-founder and Chief Executive Officer of Selina, said, “Securing this strategic investment from GUS marks a significant milestone for Selina. This transaction, a result of an exhaustive review of various alternatives, not only fortifies our financial standing as we work towards cash flow positivity and profitability, but also endorses our strategic goals and potential to create value for our shareholders. Our affiliation with GUS logically extends our commitment to providing exceptional experiences to an underserved group: students who learn abroad.”
On the layoffs he added, “As we work to streamline operations, curtail expenses, and enhance unit economics, we are grateful for GUS’s trust in our vision and potential. My co-founder Daniel, I, and our investment vehicle Kibbutz Holding S.a.r.l., stand firmly committed to Selina’s future. As part of this strategic investment, we are personally guaranteeing Selina’s obligations under the convertible debt arrangements, reinforced by a corporate guarantee from Kibbutz. This commitment reflects our unwavering dedication to steer Selina towards profitability.”
