Controversial WeWork founder Adam Neumann is raking in massive amounts of investor cash for his new real estate startup — but some venture capitalists are cringing at the comeback plan.
After news broke on Monday that Neumann’s new residential real estate startup, Flow, had raised a reported $350 million from prominent venture capital firm Andreessen Horowitz at a valuation north of $1 billion, several tech investors and founders reacted angrily.
“THIS IS DISGUSTING,” Kate Braddock, CEO of the startup Switch and a general partner at the W Fund, wrote on Twitter.
Braddock noted that the investment is the largest single check in Andreessen Horowitz’s history — and slammed the investment firm for supporting a “straight white male” who’s the “founder of one of the most toxic companies we’ve seen.”
Before Neumann quit his job as WeWork’s CEO in 2019, he reportedly fostered a “frat party” atmosphere at the company with frequent smoking and drinking in offices. The company was also hit with allegations that its office culture fostered sexual harassment.
Braddock said that Andreessen Horowitz’s investment in Flow shows that the venture capital firm helps “perpetuate over and over again a traditional system that favors a small, homogenous set of founders.”
Julia Austin, an angel investor and senior lecturer at Harvard Business School, likewise wrote that the deal is a “strong signal from one of the world’s top investors that bad behavior (by straight [white male]) is not only tolerated, but rewarded.”
Allison Byers, a tech investor and founder of a startup called Scroobius that looks to diversify tech, wrote that she was “obviously outraged” about the news.
“This is a function of how VC has evolved to operate,” Byers added in a LinkedIn post. “Generational bias is built in by the long-standing homogenous composition of decision-makers.”
Andreessen Horowitz co-founder Marc Andreessen nodded at Neumann’s past in a blog post announcing the investment, writing, “We understand how difficult it is to build something like this and we love seeing repeat-founders build on past successes by growing from lessons learned.”
“For Adam, the successes and lessons are plenty and we are excited to go on this journey with him and his colleagues building the future of living,” Andreessen added.
Another well-known tech investor, Jason Calacanis, floated the idea that Neumann’s new company — which is set to start operating next year — could be a bad investment.
“If a startup is worth $1b before it launches a product it’s probably a scam,” Calacanis wrote in response to a tweet about the investment.
After this story was published online, Calacanis responded to an email from The Post and said that he had faith in Neumann.
“If Adam opened a hot dog stand in Staten Island I would invest,” Calacanis said. “I actually think he has an 80% chance of making this work since this is his ‘revenge startup.’
Nonetheless, Calacanis also said that “giving any founder a ton of capital and [a $1 billion valuation] before they have product/market fit is always a mistake.”
Neumann infamously raised money for WeWork at valuations as high as $47 billion in 2019. The company is worth less than $4 billion today.
Details of his new project are scarce, but Flow reportedly involves plans to create a “branded product with consistent service and community features” for residential buildings in US cities, according to the New York Times. The company will reportedly offer its services to landlords in addition to owning some apartments itself.
Neumann has already bought up more than 4,000 apartments worth more than $1 billion in Miami, Fort Lauderdale, Atlanta, Nashville and other US cities, the Wall Street Journal reported in January.
Andreessen Horowitz did not respond to requests for comment, while Neumann could not be directly reached. An inquiry sent to another one of this companies, Flow Carbon, did not receive a response.
Investors slam WeWork founder Adam Neumann's 'disgusting' comeback - New York Post
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