Andreessen Horowitz (a16z) seems determined to keep capital flowing to controversial WeWork founder Adam Neumann. Stored Ventures has written its largest single check for $350 million to Flow, Newman’s new residential real estate company focused on rentals, the New York Times reported today.
The funding is worth more than $1 billion, making it a unicorn before it even starts operations, which it plans to do by 2023, the Times reported. The startup is set to build more than 3,000 apartments as part of Neumann’s vision to bring community-oriented properties he’s bought in Miami, Fort Lauderdale, Atlanta and Nashville to the rental market, the Times added.
In a blog post today on the a16z website, Marc Andreessen described Neumann as a “visionary leader” who “revolutionized” real estate. Andreessen’s post does not address any of the financial aspects of investing.
The investment marks 16z’s second round of funding for a Neumann-founded company this year: In May, the firm put $70 million into the startup’s blockchain-based carbon credit platform FlowCarbon, which, aside from its joint venture, has no ties to Flow. Founder. Interestingly, Andreessen’s blog post today calls Flow Neumann’s “first post-WeWork venture,” even though he’s listed as the co-founder of Flowcarbon in an earlier post about that investment at 16z.
“We understand how hard it is to build something like this, and we love to see repeat founders build on past successes by growing from lessons learned,” Andresen wrote in today’s blog post, indirectly referencing Newman’s time at WeWork.
WeWork’s attempt at an IPO at Newman (remember Community Adjusted EBITDA?) was so disastrous that Silicon Valley and Wall Street investors paid Newman a huge $1 billion exit package to get out of the company.
Neumann managed to get that handsome payout even though during his reign the company earned a reputation for mismanagement and poor treatment of employees, with profits ranging from ~$47 billion to ~$8 billion.
Throughout Newman’s tenure, missteps abounded. He famously trademarked the word “we” and sold it to his own company for nearly $6 million, though he returned the money to the company after the arrangement was revealed during the company’s attempted IPO and later condemned by investors and the public.
After Neumann burned investors’ money for his office’s copious amounts of booze for his wife’s vanity project, a school and wave pool, it’s surprising to see Silicon Valley come back for seconds. A16z’s deal with Flowcarbon may have been negotiated before it hit the equity markets, but the deal Flow announced today may not have, meaning today’s deal is a sign of investor confidence in Newman’s leadership in a tougher market environment.
Certainly, WeWork’s approach to co-working spaces in a pre-pandemic world, regardless of the company’s other controversies. As remote work grows in popularity, there could be a huge opportunity to build community among renters — something Newman has wanted to pursue for years. The concept has already taken a pass at WeLive, after opening two locations in a collection of residential communities it plans to build under the WeWork brand.
“Limited access to home ownership continues to be a source of inequality and stress,” wrote Andresen in a blog post today, reflecting on how Flow is poised to address the nation’s housing crisis. To achieve this, a flow is developed.
Today’s investment by Flow comes after reports surfaced that Andresen has fought back against a proposal to build new affordable housing in his super-rich hometown of Atherton, CA.