Wall Street is all about second chances, for some people.
In the latest example, a venture capital firm is backing a mysterious startup founded by a man who led a huge real-estate company to breathtaking valuations before it crumbled right before its planned IPO.
The venture capital firm Andreessen Horowitz invested in Flow, a new residential real estate startup company founded by Adam Neumann, who made a name for himself with his spectacular rise and fall as co-founder and CEO of WeWork.
Andreessen Horowitz said in a blog post on Aug. 15 that it will invest in Flow, a residential company started by Neumann that could offer the option of purchasing a residence after living in it.
The VC firm did not provide details on how Flow would function, but said it was a way to deal with the housing crisis in the U.S.
“In a world where limited access to home ownership continues to be a driving force behind inequality and anxiety, giving renters a sense of security, community, and genuine ownership has transformative power for our society,” Andreessen Horowitz co-founder and general partner Marc Andreessen wrote in the blog post.
He also said the company would use the "latest technology in a way that has never been done before to create a system where renters receive the benefits of owners."
Andreeesen did not disclose the amount of its investment, but the New York Times said the VC invested $350 million in the startup.
Scant Details Offered
Even Flow's website provided scant details on its purpose aside from launching next year, although The New York Times said the company is “effectively a service that landlords can team up with for their properties, somewhat similar to the way an owner of a hotel might contract with a branded hotel chain to operate the property.”
After WeWork, a coworking space company, failed to go public in 2019, Neumann was ousted from the startup. He later admitted that Jamie Dimon, the CEO of JPMorgan Chase persuaded him to resign. The investment and retail bank was set to lead the IPO.
Before the company could go public, its IPO filing showed massive losses, including bleeding through $1.9 billion in 2018.
A culture of extreme excesses at WeWork was reported by the media and Neumann received a package of $1.7 billion to leave the company, according to CNBC.
In 2021, the company finally went public via a special purpose acquisition company (SPAC). The stock is now trading at $5.36, down from its all-time high of $14.97.
Despite his Neumann's controversies, Mark Andreessen remains confident, calling him a "visionary leader who revolutionized the second largest asset class in the world — commercial real estate — by bringing community and brand to an industry in which neither existed before."
He gives Neumann credit for WeWork's co-sharing spaces, saying he "fundamentally redesigned the office experience and led a paradigm-changing global company in the process."
The goal of the new startup appears to be confusing for many people who asked what its function is on Twitter.
One man, Mike Rossiter, asked "What does Flow do? I couldn’t tell from the release.
Neumann recently backed Flowcarbon, a blockchain-enabled carbon credit trading platform, which has raised $70 million in its first major funding round.
The startup raised $32 million in the funding round led by Silicon Valley financiers Marc Andreessen and Ben Horowitz through their a16z crypto venture capital firm. Other investors included General Catalyst and Samsung Next.
The rest of the funding was raised through the sale of the Goddess Nature Token, which is backed by certified carbon credits from nature-based projects over the last five years.
The tokens can be retired as an offset, sold, used for borrowing and lending, or redeemed for an underlying real-world credit.