Adam Neumann’s New Multifamily Firm Gets $350M Backing From Andreessen Horowitz

reprints


Here We go again.

WeWork co-founder Adam Neumann scored a $350 million investment from venture capital giant Andreessen Horowitz for his new residential real estate company Flow, which values the new company at more than $1 billion, The New York Times reported. 

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The investment, which represents the biggest single check Andreessen Horowitz has written for a company’s funding round, follows the spectacular rise and fall of Neumann’s coworking firm. Neumann stepped down as CEO of WeWork in 2019 after he failed to take the business public and caused its $47 billion valuation to drop to less than $3 billion by 2020. 

Flow will own and operate some of the more than 4,000 apartments Neumann snatched up across Miami, Atlanta, Nashville, Tenn., Fort Lauderdale, Fla., and other U.S. cities in recent months. 

Neumann plans on including community-building features with his branded apartments, similar to his previous WeWork’s short-lived side project WeLive. It’s unclear what specific perks Flow will include and representatives for Neumann and Andreessen Horowitz did not immediately respond to requests for comment.

Marc Andreessen, co-founder of the eponymous firm, will join Flow’s board when it officially launches in 2023. He cited the red-hot residential real estate market, which has forced would-be first-time home buyers into rentals, and his expectation that remote workers will want more connected living communities as reasons behind his investment.

“We think it is natural that for his first venture since WeWork, Adam returns to the theme of connecting people through transforming their physical spaces and building communities where people spend the most time: their homes,” Andreessen wrote in a blog post explaining the investment on Monday. “Residential real estate — the world’s largest asset class — is ready for exactly this change.”

It’s not the first time the venture capital firm has bet millions on Neumann. Andreessen Horowitz poured $70 million into the cryptocurrency company Flowcarbon, which Neumann co-founded as a way to incentivize carbon reduction initiatives last year. But Andreessen Horowitz’s investment in Flow is a major vote of confidence for Neumann, given his troubled history in real estate. 

Neumann, along with co-founder Miguel McKelvey, grew WeWork into a dominant player in the coworking industry and got a whopping $9 billion from Softbank Group’s VisionFund to grow the company as quickly as possible, eventually reaching a massive $47 billion valuation

And grow it did —  WeWork burned through $1.6 billion in 2018 to expand across 29 countries, forcing Softbank to spend another $9 billion to bail out the struggling company. While Newmann extracted millions from WeWork as part of his exit deal with Softbank, WeWork employees lost their jobs as the firm’s value plummeted. WeWork eventually went public in October 2021 and is currently valued at $4 billion, according to the Times. But Andreessen saw WeWork’s complicated past as a learning opportunity for Neumann, and a reason to invest in Flow.

“We love seeing repeat-founders build on past successes by growing from lessons learned,” Andreessen wrote. “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.”

Celia Young can be reached at cyoung@commercialobserver.com.