WeWork founder Adam Neumann is using the U.S. housing shortage to market his next venture.
His new real estate company, Flow, secured significant funding from venture capitalist firm Andreessen Horowitz to the tune of $350 million, based on a $1 billion valuation.
The firm’s co-founder, Marc Andreessen, wrote in a statement:
“Shelter is one of our most basic needs. 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.”
Neumann has so far secured about 3,000 apartment units spanning at least a few states, including Florida, Georgia, and Tennessee.
While Neumann is framing Flow as a way to “disrupt” the real estate market in order to grapple with issues like housing availability and the inability of renters to gain equity, it is unclear how his new tech startup will address these matters.
To make matters more uncertain for Flow, Neumann’s reputation following WeWork’s well-documented collapse precedes him. WeWork was a startup that leased large office spaces, which the company decorated and furnished with amenities, then divided them into smaller portions and rented the offices to freelancers or small businesses.
The “charismatic” tech entrepreneur stepped down as CEO of WeWork and sold control of his company after a slew of bad business decisions handicapped WeWork’s initial public offering.
Still, communications firm Reputation Partners’ vice president Michael Grimm defended Andreessen Horowitz’s decision to back Neumann’s latest venture.
Grimm stated that Neumann “doesn’t need to worry” about how he is being perceived if he was able to gain the investment and confidence of one of “the biggest players in venture capital.”
“All that matters is [that he] provides innovation and a service that millions of people need [with Flow],” Grim added.
Startups with “lofty goals have a chance at changing the world,” Andreessen wrote in his statement.
Real estate expert and professor of finance at NYU Arpit Gupta commented that Flow could try to combine a number of existing housing options (like timeshares, co-ops, and layaway financing) and market them together.
“It’s like WeLive 2.0 combined with some sort of rent-to-equity system,” Gupta added.
