The profession of WeWork co-founder and former CEO Adam Neumann appeared to be synonymous with the rise and eventual fall of unicorn dreams. An entrepreneur whose fall from grace has attracted worldwide attention has just found a ladder in the shape of a check from the renowned enterprise capital firm Andreessen Horowitz.
Andreessen Horowitz announced Monday that it has written its largest single check to this point for Neumann’s latest startup, Flow. A hidden startup is attempting to (re)invent real estate, but as an alternative of the industrial real estate that WeWork has focused on, Neumann is considering revolutionizing rental real estate. Horowitz’s check, reportedly price greater than $350 million, values the yet-to-be-launched company at greater than $1 billion, according to The New York Times. (Andreessen Horowitz declined to comment beyond.) blog postand Flow didn’t immediately reply to a request for comment.) It’s unclear what the deal structure is between equity and debt financing.
While details remain sparse, the event has attracted a spread of feedback from early-stage investors whose primary focus is on backing outlier founders with a high probability of success. Some argue that that is what the enterprise asset class is all about – supporting daring founders – while others note that Neumann’s second probability comes as women and founders of color are struggling greater than ever to acquire seed capital.
Is it really nearly achievements?
Neumann’s history at WeWork could be viewed in a different way depending on who you ask. Much has been written about corporate cultural malaise. Neumann spent investors’ money on large amounts of alcohol for the office, school for his wife’s vanity project AND wave poolbut when the corporate finally went under before its long-planned initial public offering, it was Neumann who was left with the baton.
The corporate’s valuation dropped from $47 billion at its peak to about $8 billion during Neumann’s tenure. WeWork laid off hundreds of staff, partly due to its own fiscal imprudence, and was forced to resign as CEO in 2019 by its own investors. Yet they still paid him handsomely to go away – his exit package was price over $1 billion.
Post-match evaluation of WeWork’s failed IPO attempt focused on among the more far-fetched elements of its vision, from reporting “community-adjusted EBITDA” to announcing its intention to “raise the world’s consciousness.”
Ultimately, nevertheless, the corporate made its public debut via a SPAC in late 2021, albeit at a much lower valuation and with much less fanfare. Despite the general public criticism, WeWork’s early investors still benefited from the corporate’s support, Rare Breed Ventures founder McKeever Conwell, whose company backs seed and pre-seed firms, told TechCrunch.
“At the tip of the day, Adam is a white guy who began an organization and got a multi-billion dollar valuation. Was there any cheating involved? Vibrant. Did he do anything mistaken? Vibrant. But I believe people forget that in case you were an early investor and we weren’t, you continue to got paid,” Conwell said.
Conwell said that given the importance VCs place on seed-stage founder networks, it’s comprehensible why an organization like a16z would wish to trust a founder like Neumann, at the least in the case of constructing a multibillion-dollar real estate business — something it has done before.
“If we take a look at the history of successful entrepreneur founders of technology firms, we see that most of the biggest achievements of those founders weren’t the very first thing they did. That is like their third, fourth or fifth company (that has been successful),” Conwell said.
Especially in difficult economic times like Conwell – he noted on TwitterAsset allocators are likely to put their money into what they consider “protected” investments. He added that this is precisely what a16z appears to be doing, betting on Neumann.
“Corporations like Andreessen will only deal with the small pocket (opportunity) where they know the right way to earn a living… It’s textbook. They comprehend it works, it is a manual they will sell to their investors. It is a manual they never change. It doesn’t matter because in the event that they don’t change it, they still win,” Conwell said.
Vision
In terms of visions, renovating the rental property market isn’t a novel idea. Venture capital investment worth over $100 million, Common is a co-living company that manages apartments and houses. Mockingly, the startup runs considered one of the previous WeLives, which was like a WeWork dormitory for rental properties.
Co-founder Brad Hargreaves, who stepped down as the corporate’s CEO lower than two weeks ago, told TechCrunch via email that “no matter what you think that of Neumann, WeWork was modern and defined the category.”
“I consider we are going to see more enterprise capital deals,” Hargreaves continued. “VCs (in case you may even call them that today) have a number of capital to deploy, and it’s clear that massive changes in some industries won’t come from small software innovations alone,” Hargreaves said.
At the identical time, Hargreaves suggested that Neumman’s latest deal is wealthy. He said the dimensions of the check was “a hell of a number of preference for some of these firms,” declaring that Greystar bought Alliance Residential, which owned 110,000 apartments, for $200 million. FSV, which offers property management services, is valued at just $6 billion and owns 1.5 billion units and dozens of brands. He believes the deal is probably going not structured like a conventional enterprise enterprise, even though it’s unclear what percentage of the check will likely be debt relatively than equity financing.
Kate Brodock, CEO of Switch and general partner at W Fund, announced the deal “disgusting.”
“It’s considered one of the most important and most well-known firms on the market, I simply cannot understand it,” Brodock told TechCrunch. “It’s like someone waking up and saying, what number of boxes can I check that just sets us back?”
Allison Byers, founding father of Scroobious, a platform that goals to diversify startups and provides founders more support for his or her ventures, described feeling a way of suppressed rage.
“There may be a note of acceptance and almost learned helplessness in it. Or like a trauma that we have now all experienced a lot that it not has the identical impact,” she told TechCrunch via Twitter easy messages. “This all seems latest and scary to those that have had their eyes opened over the previous few years to the systemic problems of VC funding, and we have now been coping with this ceaselessly.”
Byers added, “It’s only a matter of fact and I am unable to let it devour my day (because) I actually have my normal load of founder-related things.”