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Sunday, May 19, 2024

Adam Neumann’s new property startup is worth $1B even before launch!

Adam Neumann, the controversial WeWork founder, is back after three years with his new business Flow, which has received the largest single-round investment from famous Silicon Valley investor a16z. However, this has failed to please the tech and venture capital communities.

WeWork’s infamous founder Adam Neumann, who the VCs ousted in 2019 for financial fraud, mismanagement, and managing a terrible work culture, might raise a large check again, especially in a venture bear market — and for a firm that hasn’t even debuted yet.

Andreessen Horowitz (a16z), a major Silicon Valley venture capital company known for its early bets on Airbnb and Twitter, made a $350 million pre-seed investment in Neumann’s new business Flow last evening IST, valuing the soon-to-be-launched residential real estate firm at $1 billion (unicorn). While a16z’s official blog article did not disclose any financial specifics of the transaction, the media estimated it to be $350 million, citing anonymous sources.

This is the largest check ever given to a founder by a16z in a single round. Marc Andreessen, Co-founder and General Partner at the VC firm, explained its bet on Neumann, who botched WeWork’s IPO and presided over its fall from a sky-high valuation of $47 billion to the current $4 billion, saying, “Adam is a visionary leader who revolutionised the world’s second largest asset class — commercial real estate — by bringing community and brand to an industry in which neither existed before.”

According to its basic website, Flow plans to administer more than 3,000 apartment units Neumann has acquired around Miami, Fort Lauderdale, Atlanta, and Nashville, and provide consumers with a branded rental housing experience and communal living amenities.

This service will also be available to third-party developers. As remote working becomes more prevalent in a post-pandemic environment, a16z believes the housing sector is ready for disruption and believes “repeat entrepreneurs” like Neumann will build on their previous triumphs.

Horowitz said, “We understand how difficult it is to start something like this, and we like seeing repeat entrepreneurs improve on earlier accomplishments by learning from their failures… This entails rethinking the whole value chain, from the acquisition and ownership of buildings to how people interact with their buildings and how value is divided among stakeholders. The triumphs and lessons for Adam are abundant, and we are eager to accompany him on this path of shaping the future of life.”

This is a16z’s second investment in a firm started by Neumann this year. Earlier in May, the VC firm invested $70 million in Flowcarbon, a blockchain-based carbon credit network that is unrelated to the real estate business Flow. Nonetheless, the crypto currency $FLOW rose temporarily on Monday as a result of a16z’s support for its namesake firm.

“Flowcarbon and Flow are two distinct firms. Both are unconnected to the token FLOW “confirmed the press

Neumann’s ability to attract a large round of VC investment despite a dismal track record and a worldwide “startup winter” has piqued the interest of many, with many accusing our a16z of encouraging a homogeneous group of “male white entrepreneurs.”

The largest cheque from @a16z is going to the founder of one of the most destructive firms we’ve seen. Firms like these reinforce a conventional structure that promotes a small, homogeneous collection of founders,” W Fund General Partner Kate Bedrock tweeted.

“Me: can’t obtain finance for a proven supplement firm with over $1 million in sales,” Amanda Goetz, Founder of House of Wise, stated. Adam Neumann sneezes a fresh invention and receives $350 million from a16z.


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