SoftBank, WeWork's biggest outside investor, is urging the startup to shelve its initial public offering, sources told CNBC's Leslie Picker.

News of SoftBank's urging WeWork to put off its IPO was initially reported by the Financial Times.

The We Co., as the co-working company is formally called, had been in discussions with SoftBank and other shareholders and advisors about whether or not to move ahead with its IPO, CNBC reported on Friday. WeWork has faced criticism regarding its complicated corporate structure, its governance and payments made to CEO Adam Neumann.

WeWork advisors are still evaluating investor appetite for an IPO valuation between $15 billion and $20 billion, according to the Financial Times. That would be less than half of the $47 billion valuation the company was given when SoftBank invested $2 billion in the startup in January.

While SoftBank and its $100 billion Vision Fund emphasize their long-term investing credentials, founder and CEO Masayoshi Son has set out an ambitious IPO pipeline for tech investments spanning ride-hailing, fintech and health startups.

Putting The We Co.'s offering on hold would disrupt that schedule at a time when SoftBank is seeking funds from investors for a second Vision Fund.

SoftBank made a follow-up investment in The We Co., one of its biggest tech bets, at a $47 billion valuation earlier this year — a number widely treated with scepticism by analysts.

Sanford C. Bernstein analyst Chris Lane said that if The We Co. halts the IPO, SoftBank could come up with an alternative funding plan for the startup, which he estimates needs $9 billion in funding to become cash-flow positive.

SoftBank "have got an important voice, but more importantly they have money ... (The We Company) will have to listen to them," said Lane, who values the office space-sharing firm at $23 billion.

Tech conglomerate SoftBank has burned through much of the $100 billion raised by its first Vision Fund in just two years, recording big paper gains on internal revaluations of its tech investments.

Vision Fund defends its valuation techniques, which include cash-flow analysis, recent transactions and comparison with peers to underpin its numbers.

At the end of June the fund recorded the value of $71 billion invested in 83 investments as having grown by $20 billion. Since then the share price of portfolio companies Uber and Slack have both fallen by around a third.

SoftBank says many investments receive a vote of confidence as third parties come in as co-investors or by making follow-on investments at the same or higher valuations.

In the case of The We Co.'s $47 billion valuation, if a tech company shelves an IPO due to a lower valuation than expected, investors are generally expected to take that fall into account when appraising their stakes.

—Reuters contributed to this report.

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