Andreessen Horowitz has invested about $350 million in Adam Neumann’s housing venture Flow, The New York Times reported Monday, citing three people close to the deal.
The investment with the much-touted firm “values Flow at more than $1 billion before it even officially opens its doors,” the outlet added.
Adam Neumann co-founded WeWork in 2010 and grew the rental company to a meteoric $47 billion valuation before being ousted as CEO in 2019.
The company now has a market value of around $4 billion and its CEO is Sandeep Mathrani, formerly CEO of a more traditional player, Brookfield Properties Retail.
The venture world is reacting to the project, particularly criticizing the large check Neumann has received when founders of color often struggle to get funding, as TechCrunch and the New York Post noted.
THIS IS DISGUSTING.@a16zhis biggest check goes to a (straight white male) founder of one of the most toxic companies we’ve seen. Companies like this perpetuate over and over a traditional system that favors a small, homogeneous set of founders. https://t.co/PLMKGIULqC
— Kate Brodock (@Just_Kate) 15 August 2022
If a startup is worth $1 billion before it launches a product, it’s probably a scam.
— firstname.lastname@example.org (@Jason) 15 August 2022
Mac Conwell, founder and managing partner of RareBreed Ventures, said Contractor that he could understand why a company would support Neumann, although he is unsure if he would make the same decision himself.
“We see sports teams pick up unethical athletes time and time again,” he said. “As a sports franchise, your job is to win. As a VC, your job is to return capital to your LPs.”
“It’s easy to fall in love with the idea of how he could do this again,” he added.
Neumann’s time at WeWork was chronicled in Hulu’s 2021 documentary, WeWork: Or The Making and Breaking of a $47 Billion Unicorn. His WeWork tenure was also fictionalized in WeCrashedfrom Apple TV+ with Jared Leto and Anne Hathaway.
This is not Neumann’s first attempt at housing. During his time as WeWork CEO, he also tried to expand into residential apartments with WeLive. He was inspired, he told investors, by his childhood growing up in a kibbutz in Israel, a communal housing arrangement, according to Jewish Currents.
“What began as a Brooklyn desk rental outfit metastasized into Manhattan’s largest office tenant, reaching a private market value of forty-seven billion dollars, before it all folded in a failed IPO attempt,” the outlet wrote.
Neumann walked away from the company and his shares in WeWork with a payout of $445 million, according to The Guardian — likely giving him plenty of opportunity to get back into the startup game.
And high-profile Andreessen Horowitz, a venture firm that backed Affirm, Asana and Lyft, has leaned into Neumann’s two latest ventures, the NYT reported: It led a $70 million funding round for crypto startup Flowcarbon, and now its $350 million investment. in what appears to be Neumann’s next high-profile gambit, housing.
“Despite all the energy put into covering the story, it is often underestimated that just one person has fundamentally redesigned the office experience and led a paradigm-shifting global company in the process: Adam Neumann,” Marc Andreessen wrote in a blog post explaining why he wants to support the project.
Details are sparse, but the idea is that Flow will be a pseudo-property management company that provides “a branded product with consistent service and community features,” the outlet wrote. Neumann also owns over 3,000 apartments in Miami, Fort Lauderdale, Atlanta and Nashville, according to the NYT. His buildings will also be part of the company, the outlet added.
Andreesen’s blog also suggests that the point of the company is to address housing inequality and shortages, which have historically disenfranchised black Americans in the US, but it was not clear how it planned to do that.
“In a world where limited access to home ownership continues to be a driver of inequality and anxiety, providing renters with a sense of security, community and true ownership has transformative power for our society,” Andreessen wrote.
Andreesen also criticized the current housing arrangements, calling apartment buildings “soulless”.