WeWork co-founder and former CEO Adam Neumann’s career has been synonymous with the rise and eventual collapse of the unicorn dream. The entrepreneur whose downfall has captured global attention has just found a ladder in the form of a check from his famous venture capital firm Andreessen Horowitz.
Andreessen Horowitz announced on Monday that it has written the largest single check ever for Neumann’s new startup, Flow. Stealthy startups are looking to reinvent real estate (again), but instead of WeWork’s focus on commercial real estate, Neumann is looking to revolutionize rental real estate. According to The New York Times, Horowitz’s checks are reportedly worth more than $350 million for him, and the company that hasn’t yet launched is worth more than his $1 billion. (Andreessen Horowitz declined to comment outside of the blog post, and Flow did not immediately respond to a request for comment.)
Details remain sparse, but the development is meeting mixed views from early-stage investors. Their job is to back extraordinary founders who have a good chance of success. Some say ‘s second chance comes when women and founders of color are struggling more than ever to get starter capital.
Is it really all about achievements?
Neumann’s track record at WeWork can be viewed differently depending on who you ask. A lot has been done out of corporate cultural discomfort. Neumann spent his investor’s cash on an office, school for his wife’s vanity project, and lots of booze for a wave pool, but ahead of his long-planned IPO. Neumann wasn’t the one with the bag when the business finally collapsed.
The company’s valuation plummeted from a peak of $47 billion to about $8 billion during Neumann’s tenure. WeWork laid off thousands of employees, and in 2019 was finally ousted as CEO by his own investors. But even though they still paid him a lot, his retirement package was worth more than $1 billion to him.
A post-game analysis of WeWork’s failed IPO attempt focuses on some of the more outrageous parts of his vision, from reporting “community-adjusted EBITDA” to announcing his intention to “raise the world’s awareness.” I was guessing.
However, the company eventually made its public debut through SPAC in late 2021, with much lower valuations and noticeably less fanfare. Despite public criticism, early WeWork investors are still profiting from backing the company, Rare Breed Ventures founder McKeever Conwell told TechCrunch.
“After all, Adam is a white guy who started a company and got a billion-dollar valuation. Now, were there some tricks in there? Of course. Some things he did wrong? Of course.” But what people forget is that if you were an early investor and we weren’t, you were still getting paid,” Conwell said. rice field.
Given VCs’ heavy focus on founder networks in the seed stage, Conwell said companies like a16z are at least as likely to build multi-billion-dollar real estate as Neumann’s. A business that said he understood why he wanted to put his trust in the founder — what he did before.
“If you look at the history of entrepreneurs and founders of successful technology companies, many of these founders’ greatest achievements weren’t their first. is like a company [that succeeds]’ said Conwell.
Especially in times of economic hardship, like Conwell pointed out on twitter, asset allocators tend to pile their money on what they deem to be “safe” investments. That’s exactly what a16z is betting his Neumann is doing, he added.
“Companies like Andreessen try to focus only on small pockets. [of opportunities] I know they know how to make money…it’s a playbook. they know it works. It’s a strategy that can be sold to investors. It’s the playbook that they never change. If they don’t change it, they’re still winning, so it doesn’t matter,” Conwell said.
As far as vision is concerned, renovation of the rental property market is not a unique idea. Venture He Capital, in which he has invested more than $100 million, is a co-living firm where he manages a series of apartment and residential properties. Ironically, this startup runs one of his former WeLives. This was his WeWork dormitory-like rental property.
Co-founder Brad Hargreaves, who stepped down as the company’s chief executive less than two weeks ago, told TechCrunch in an email:
“I believe there will be more ‘asset-focused’ venture deals,” Hargreaves continued. Hargreaves said, “Venture capital (even if you can call it VC these days) has plenty of capital to deploy, and it’s hard to believe that there are industries where a light touch of software innovation alone won’t bring about massive change. It’s clear,” he said.
At the same time, Hargreaves hinted that Neumman’s new contract was rich. Alliance Residential, which owns 110,000 apartments, tells Greystar how he was acquired for $200 million, and the check size is “a very likable stack that stacks up against this kind of company.” said. He offers property management services and has an FSV valuation of only $6 billion, with 1.5 billion units and dozens of brands. He believes the deal likely won’t be structured like a traditional venture deal, but it’s unclear what percentage of the check will be debt-financed and equity-financed.
Switch CEO and W Fund general partner Kate Brodock called for the deal “Disgusting.”
“This is one of the biggest, most exciting companies in the world, and I just don’t get it,” Brodock said in an interview with TechCrunch. Checking these boxes only sets us back.”
Scroobious founder Allison Byers said the platform aims to diversify startups and make founders more supportive of ventures, but anger is contained.
“Underlying this acceptance is little helplessness, or like the trauma we’ve all experienced, it just doesn’t have the same impact anymore,” she told TechCrunch in a Twitter DM. This all seems new and scary to people who have been looking at the systemic problem of VC funding for years, but we’ve been dealing with it forever.”
Byers adds: [because] I usually have a lot of work to do as a female founder. ”