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 resigning as WeWork’s chief executive following a failed attempt to take the lossmaking business public.

One person familiar with the matter said that Andreessen Horowitz had invested $350mn. In May, it had invested an undisclosed sum in FlowCarbon, another company backed by Neumann and his wife Rebekah 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 now stood to shake up residential property, the only larger asset class.

“It’s often under appreciated that 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 how Flow intends to change the residential apartment industry: 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 Atlanta, 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, echoed Neumann’s argument that the US was facing a housing crisis and that residential real estate was ripe for disruption.

He 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 while also funding start-ups.

“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.

The WeWork co-founder had previously ventured into residential property with the launch of WeLive, dormitory-style apartment buildings that featured common spaces. His successors have refocused WeWork on its core office proposition, however.

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

In the essay, called It’s Time to Build, he 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 Arillaga Andreessen, attacked a proposal to change zoning rules in Atherton, 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.