Andreessen Horowitz backs WeWork co-founder’s property venture

Andreessen Horowitz backs WeWork co-founder’s property venture

Adam Neumann has attracted his biggest external investment since January 2019, when Masayoshi Son’s SoftBank put a $47bn valuation on WeWork, the office space company he co-founded that is now valued at $4bn.

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

One person familiar with the matter said that Andreessen Horowitz had invested $350mn at a roughly $1bn valuation. In May, it had 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 post, co-founder Marc Andreessen heaped praise on Neumann as “a visionary leader who revolutionised the second-largest asset class in the world — commercial real estate” and stood to shake up residential property, the only larger asset class.

“Only one person has fundamentally redesigned the office experience and led a paradigm-changing global company in the process: Adam Neumann,” he said.

In a nod to past controversies, Andreessen added: “We love seeing repeat-founders build on past successes by growing from lessons learned. For Adam, the successes and lessons are plenty.”

Neumann, who left WeWork a billionaire, has disclosed few details of Flow’s plans: its website only features the words “live life in flow” and “coming 2023”. A spokesman for Neumann declined to comment.

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

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

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

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

“We started by buying this real estate, but then I started walking the buildings, just feeling, and it felt like there’s so much more that could be done to make these tenants’ lives better,” he told the FT in March.

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

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

Marcela Sapone, Alfred’s chief executive, said however that Flow would not be using her “resident experience” company’s product. “This is the Alfred model, but he’ll be focusing on his buildings,” she said. “His belief is this is going to be good for both of us.”

Andreessen attracted widespread attention early in the coronavirus pandemic with a rallying cry to Silicon Valley to put more of its money into creating physical assets.

His essay attacked a “smug complacency” that he said had led to under-investment in manufacturing and construction of all kinds, leading among other things to “crazily skyrocketing housing prices in places like San Francisco, making it nearly impossible for regular people to move in 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 the construction of multifamily homes, according to The Atlantic. The zoning proposal was dropped in July.

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