The prominent venture capital fund in Silicon Valley, Andreessen Horowitz, decided to invest about 350 million dollars in Adam Neumann’s new company, Flow, even before the company opened its doors. According to a “New York Times” report, this is the largest personal check written by the venture capital fund in a fundraising round for the company. That makes Flow over $1 billion before it officially opened its doors.
The company, Flow, wants to change the real estate market in the context of apartment rentals. The new company is not similar to long-term office space rentals like WeWork was. According to the report, Flow is actually a service for apartment owners with their properties, similar to how a hotel owner may call on a well-known hotel chain to operate the property. The company is expected to launch in 2023, Marc Andreessen himself will join its board. Neumann plans to make a sizable personal investment in Flow in the form of cash and real estate assets.
Neumann purchased more than 3,000 housing units in Miami, Fort Lauderdale, Atlanta and Nashville. His idea is to create a brand with service and community features that will activate these assets. The report did not publish exact details about the business plan, however it is noted that it is financially separate from the crypto company Flowcarbon, which was also founded by Neumann and recruited under the leadership of Andreessen Horowitz.
How does Flow plan to help renters? It is not clear
According to a blog post by Andreessen Horowitz, where the value of the investment was not specified, Andreessen wrote that he was interested in Flow because the rental real estate market was ripe for disruption. He opened his message with the words: “Our nation has a housing crisis.” In his message he wrote that Today, when more and more people work from home and they “will experience much less, if at all, the social connection and friendships in the office, which the local workers enjoy. For many of these people, increased screen time and reduced personal interaction will result in challenges not limited to its employees, such as alienation and loneliness. This is not a good way for anyone and it needs to be addressed directly, right now.”
He hinted that the company might be trying to tackle one of the biggest challenges facing renters: “You can pay rent for decades and still have zero equity – nothing. In a world where limited access to home ownership continues to be a driving force behind inequality and anxiety, to give Renters have a sense of security, community and real ownership – there is a transformative power for our society. When you take care of people in their home and provide them with a sense of physical and financial security, you empower them to do more and build things.” It is unclear if the company will offer a rent-to-own program or another mechanism for tenants to generate equity.
Neumann did not respond to the report.
Ever since things at WeWork didn’t go according to plan, Neumann has been criticized for his management style. A venture capital fund of this size supporting him is a good sign, perhaps even a rebuke to Neuman’s critics as the report in the “New York Times” indicates. Andreessen commented on the company’s blog and called Neumann: “a visionary leader who revolutionized the second largest asset class in the world – commercial real estate – by bringing a community and a brand to an industry where neither existed before.”
Andreessen responded to the media coverage of Neuman and said that “often, it is not appreciated that only one person fundamentally redesigned the experience of the office and led a global company that changed the paradigm in the process – Adam Neuman”. Andreessen added that “we like to see returning founders build on past successes by growing from lessons learned,” and that for Neumann, “the successes and lessons are many.”
Last March, Neumann invested in a technology company in the field of real estate called Alfred. We reported then that the Alfred company, founded in 2014, announced the raising of 125 million dollars in order to acquire a property management company and also to expand globally – including to Israel. This is a management platform Tenants for property owners.