WeWork founder gets $350 million for new product to compete in residential and rental markets: 3 things to know

Adam Neumann has been credited with creating a paradigm shift in the office rental market through coworking spaces, but his IPO failed spectacularly and the coronavirus pandemic helped transform his business, We workand its properties in ghost towns.

Neumann’s IPO in August 2019 collapsed and WeWork’s valuation fell from $47 billion to $10 billion after investors universally rejected the offer. He was removed as CEO and WeWork was absorbed by Japanese investment firm SoftBank. Neumann walked away with hundreds of millions of dollars. The company is now valued at $3.97 billion.

Now he’s getting into residential real estate with the backing of Andreessen Horowitz, one of Silicon Valley’s best-known venture capitalists and an early investor in Facebook and Airbnb. New York Times reported.

Airbnb has disrupted the hospitality industry, allowing people to rent rooms anywhere in the world by promoting “live like a local” on its online marketplace for lodging, homestays and rentals. holidays.

Adam Neumann buys thousands of apartments

Neumann is launching a new company in 2023 called Flow, focused on the residential real estate market, the DealBook reported report. Neumann has purchased over 3,000 apartments in Miami, Fort Lauderdale, Atlanta and Nashville. Its goal is to rethink the housing rental market by creating a branded product with consistent service and community features. Flow will operate the properties it has purchased and will also provide services to new developments and other third parties.

Black Americans have the highest death rates but the lowest levels of life insurance
Are you prioritizing your cable entertainment bill over protecting and investing in your family?
Smart policies are as low as $30 per month, no medical exam required
Click here to get smart on protecting your family and loved ones, no matter what

Owners can team up with Flow the same way a hotel owner might contract with a branded hotel chain to operate the property, New York Times reported.

Silicon Valley venture giant invests $350 million

Andreessen Horowitz is investing about $350 million in Flow, according to three people briefed on the deal. Co-founder and general partner Marc Andreessen will join Flow’s board of directors. The investment is the largest individual check Andreessen Horowitz has ever written in a round of corporate funding, and it values ​​Flow at more than $1 billion before it even officially launches.

The housing market is ripe for disruption

Andreessen suggested Neumann deserved more credit than he was getting and identified a market ripe for disruption. “Our nation has a housing crisis,” wrote Andreessen in a post on his company’s website. “It’s often underestimated that one person fundamentally re-engineered the desktop experience and led a paradigm-shifting global company in the process: Adam.”

A third of Americans rent their homes and more than half of those who live in urban areas are renters. “Flow’s investment thesis appears to reflect the economic and social trends that are get more people to rent houses rather than buying them at a time when there is a housing shortage,” wrote Andrew Ross Sorkin, editor of the Transaction book newsletter.

Short-term rentals (STR) are generally considered a family investment, Forbes reported. The management and ownership of vacation properties has traditionally been small-scale and family-owned, such as inherited properties or seasonally used second homes. But with remote working increasing demand for short-term rentals in new markets, many small-scale landlords are switching from long-term to short-term rentals in the hope of higher returns.

“Now the sector is get steam investors, including institutions,” wrote Demetrios Barnes, chief operating officer of SmartRent, a smart home automation company developing software and hardware for landlords. “As a former single-family rental operator and small investor, I believe STRs are disrupting real estate investments.”