One would think after the debacle that Adam Neumannn created with WeWork that at the very least he would have a tough time finding investors for a new startup. But looks like Lady Luck favors the Israeli-American businessman who cashed out when the WeWork boat hit troubled waters. Three years after his exit, he is back with Flow, a company focused on real estate, which has secured investment from Silicon Valley venture capital firm Andreessen Horowitz (a16z).
The news was revealed on August 15 by Marc Andreessen, co-founder of a16z, via his firm’s blog post. For Neumann, who has garnered brickbats from the investment community, Horowitz’s investment can be seen as a sign of support and can serve as a foil for his critics.
The Neumann and Horowitz Partnership
Andreessen Horowitz is an institution in itself. One of the early backers of the likes of Airbnb and Facebook, the venture capital firm is touted to have the Midas touch. a16z is nothing less than royalty in investment circles, and its backing of Flow is enough to make critics second guess themselves.
So, why has a16z chosen to be the wind beneath Flow? According to people in the know, the firm has invested $350 million and valued the company at almost $1 billion. It is also rumored that Neumann will make personal investments in the form of cash and real estate.
WeWork was once valued at $47 billion, so it is not surprising that Flow has got off to a smooth start.
In his blog post, Andreessen discusses the changes facing the American economy and how the real estate landscape needs to adapt to The Great Resignation and overall shift in working styles. He asserts that Flow is equipped to tackle this problem.
He writes, “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.” Addressing the criticism directed toward Neumann and WeWork, he stated that although the story has been covered multiple times, “it’s often underappreciated that only one person has fundamentally redesigned the office experience and led a paradigm-changing global company in the process: Adam Neumann. 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. For Adam, the successes and lessons are plenty and we are excited to go on this journey with him and his colleagues building the future of living.”
The flow of Flow
The New York Times revealed that the $350 million investment is the single-largest check written for a single round of backing in the fund’s history.
Flow’s company website does not divulge much, and only states that it is expected to launch sometime in 2023.
According to the Times, Horowitz has already purchased around 3,000 units in Atlanta, Fort Lauderdale, Miami, and Nashville, and will soon offer branded rental services to developers, where he will operate as the landlord. The billionaire investor mentioned that he wishes to offer a community-style working experience to people as they move away from in-office working and settle away from the city.
However, critics were quick to point out that Horowitz’s concern over the housing crisis seems disingenuous as he recently opposed a proposal on new housing projects in his neighborhood in Atherton, California.
As nearly a third of Americans rent homes, this seems a solution geared towards offering a branded product with consistent service. Horowitz said that he supports Flow as the housing crisis has been a source of anxiety for many, and this model will give renters a sense of security with ownership benefits. He concludes his memo stating, “We are thrilled by the scope and aspiration of this project. It is not lacking in vision or ambition, but only projects with such lofty goals have a chance at changing the world.”
