WeWork’s hugely controversial founder Adam Neumann, who was infamously ousted by VCs in 2019 for monetary fraud, mismanagement, and overseeing a toxic work culture, could raise a massive cheque again, especially in a venture bear market — and for a startup that hasn’t even launched yet.
IST, prominent Silicon Valley VC fund Andreessen Horowitz (a16z), known for its early bets on Airbnb and Twitter, announced a $350 million pre-seed investment in Neumann’s new startup Flow, valuing the soon-to-be-launched residential real estate firm at $1 billion (unicorn).
While a16z’s official blog post did not disclose any financial details of the deal, NYT pegged it at $350 million, citing unnamed sources. This is a16z’s biggest ever cheque in a single round to any founder.
Explaining its bet on Neumann, who botched up WeWork’s IPO and presided over its fall from a sky-high valuation of $47 billion to the current $4 billion, Marc Andreessen, Co-founder and General Partner at the VC firm, said, “Adam is a visionary leader who revolutionized the second largest asset class in the world — commercial real estate — by bringing community and brand to an industry in which neither existed before.”
Flow, slated to launch in 2023 as per its rudimentary website, looks to run more than 3,000 apartment units Neumann has purchased across Miami, Fort Lauderdale, Atlanta and Nashville, and offer a branded rental housing experience and community living features to people. This service will be extended to third-party developers as well, according to DealBook.
As remote working grows abundantly in a post-pandemic world, a16z reckons the housing market is ripe for disruption, and trusts “repeat founders” like Neumann to build on their past successes.
“We understand how difficult it is to build something like this and we love seeing repeat-founders build on past successes by growing from lessons learned… This means rethinking the entire value chain, from the way buildings are purchased and owned to the way residents interact with their buildings to the way value is distributed among stakeholders,” Horowitz explained, adding, “For Adam, the successes and lessons are plenty and we are excited to go on this journey with him building the future of living.”
Interestingly, this is a16z's second investment in a Neumann-founded startup this year. Earlier in May, the VC firm had pumped in $70 million into Flowcarbon, a blockchain-based carbon credit platform, which reportedly has no connection with the real estate startup Flow. Nonetheless, crypto token $FLOW spiked briefly, on Monday, following the news of a16z’s backing of its namesake company. “Flow Carbon and Flow are separate companies. The token FLOW is unrelated to both,” confirmed WSJ.
