Andreessen Horowitz backs WeWork co-founder’s real estate business

Adam Neumann attracted his biggest outside investment since January 2019, when Masayoshi Son’s SoftBank valued WeWork, the office space company he co-founded and which is now valued at $4 billion, at $47 billion.

Andreessen Horowitz, the Silicon Valley venture capital firm, said on Monday it had backed Flow, the residential real estate company Neumann has been building since a failed attempt to take WeWork public prompted him to step down as chief executive.

A person familiar with the matter said Andreessen Horowitz invested $350 million at a valuation of around $1 billion. In May, he invested an undisclosed sum in Flowcarbon, another Neumann-backed company that is trying to make carbon credit markets more transparent using blockchain technology.

In a blog postco-founder Marc Andreessen praised Neumann as “a visionary leader who revolutionized the world’s second largest asset class – commercial real estate” and stood up to shake up residential real estate, the only broader asset class.

“One person has fundamentally re-engineered the desktop experience and led a paradigm-shifting global company in the process: Adam Neumann,” he said.

In a nod to past controversies, Andreessen added, “We love to see founders repeatedly build on past successes by building on lessons learned. For Adam, the successes and lessons are many.

Neumann, who left We work a billionaire, has divulged few details about Flow’s plans: its website only features the words “live life in Flow” and “come 2023”. A spokesperson for Neumann declined to comment.

But in a interview with the Financial Times in March, he said he was exploiting crises in housing supply and affordability that were forcing more young Americans to rent rather than buy.

He saw “tremendous opportunity” to provide a greater sense of community in multifamily housing, he said at the time, and was targeting cities like Austin, Miami and Nashville, which combine growing populations young people with job growth, cultural attractions and good weather.

Andreessen, an early backer of Facebook and Airbnb, gave few details on how Flow works, but said it would involve “rethinking the whole value chain, from how buildings are bought and owned, how residents interact with their buildings, how value is distributed among stakeholders”.

After leaving WeWork, Neumann began buying hundreds of millions of dollars worth of affordable rental apartments.

“We started out buying this property, but then I started walking around the buildings, just smelling, and it felt like there was so much more to do to improve the lives of these tenants” , he told the FT in March.

Neumann had ventured into residential real estate with the launch of WeLive, but only managed to open two of his communal apartment buildings before leaving WeWork.

Last October, his family office led a $42 million fundraiser for Alfred, which offers tenants services ranging from collecting their dry cleaning to booking communal yoga sessions.

Marcela Sapone, chief executive of Alfred, however, said Flow would not use his company’s “resident experience” product. “It’s Alfred’s model, but he will focus on his buildings,” she said. “His belief is that it’s going to be good for both of us.”

Andreessen attracted wide attention at the start of the coronavirus pandemic with a rallying cry for Silicon Valley to invest more in building physical assets.

His writing attacked “sufficient complacency” which he says has led to underinvestment in manufacturing and construction of all kinds, leading among other things to “skyrocketing housing prices in places like San Francisco, making almost impossible for ordinary people to settle down and take the jobs of the future.

However, earlier this year, Andreessen and his wife, philanthropist Laura Arrillaga Andreessen, attacked a proposal to change zoning rules in Atherton, California, the wealthy Silicon Valley town where they live, to allow construction of multi-family homes, according to The Atlantic. The zoning proposal was dropped in July.

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