Andreessen Horowitz (a16z) seems determined to get the capital flowing to controversial WeWork founder Adam Neumann. The legendary venture firm wrote its largest-ever individual check, worth $350 million, to Flow, Neumann’s new rental-focused residential real estate company. reported the New York Times today.
The funding round values Flow at more than $1 billion, making it a unicorn before it even launches, which is what it plans to do in 2023, according to the Times. The startup is expected to operate more than 3,000 apartment units that Neumann has purchased in Miami, Fort Lauderdale, Atlanta and Nashville as part of its vision to bring community-oriented functions to the rental market, the Times added.
In a blog post on a16z website today, Marc Andreessen described Neumann as a “visionary leader” and credits him with “revolutionary” real estate. Andreessen’s post did not address the financial terms of the investment.
The investment marks a16z’s second endorsement for a Neumann-founded company this year: In May, the company put $70 million into the entrepreneur’s blockchain-based carbon credit platform, Flowcarbon, which appears to have no relationship with Flow other than its shared co-operation. founder. Oddly enough, Andreessen’s blog post today calls Flow Neumann’s “first venture since WeWork,” even though he is listed as co-founder from Flowcarbon in an earlier post from a16z about that investment.
“We understand how difficult it is to build something like this, and we’d love to see founders build on past successes by growing from lessons learned,” Andreessen wrote in today’s blog post, implicitly referring to Neumann’s time at WeWork.
WeWork’s attempted IPO under Neumann (remember: community adjusted EBITDA?) was so disastrous that the Silicon Valley and Wall Street investors ended up paying Neumann a huge exit package, worth ~$1 billion, just to leave the company.
Neumann managed to get that handsome payout despite the company dropping in value from ~$47 billion to ~$8 billion under his rule and gaining a reputation for mismanagement and ill-treatment of employees.
During Neumann’s tenure, there were many missteps. He famously trademarked the word “We” and sold it back to his own company for nearly $6 million, although he eventually returned the money to the company after this arrangement was revealed during the company’s IPO attempt and subsequently criticized by investors and the public.
After Neumann burned investors’ money large quantities of drinks for the office, a school for his wife’s vanity projectand a wave pool, it’s somewhat surprising to see Silicon Valley come back for seconds. A16z’s deal with Flowcarbon may have been negotiated before the stock market defeat, but the deal with Flow announced today probably wasn’t, meaning today’s deal is an even bigger sign of investor confidence in Neumann’s leadership amid generally difficult market conditions.
Certainly, WeWork’s approach to co-working spaces was prescient in a pre-pandemic world, regardless of the company’s other controversies. As remote working becomes more popular, there may be a great opportunity to build a community among tenants — an idea that Neumann has been striving for for years. He previously passed this concept with WeLive, a series of residential communities he planned to build under the WeWork brand. that fell after opening only two locations.
In his blog post today, Andreessen mused extensively on how Flow is poised to solve the country’s housing crisis, writing that “limited access to home ownership remains a driver of inequality and fear,” although details in the post on exactly how Flow will try to achieve this were scant.
Today’s investment in Flow comes just after reports surfaced that Andreessen fought a proposal to build new affordable housing in his ultra-wealthy hometown of Atherton, CA.
