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Controversial WeWork founder Adam Neumann is raking in huge amounts of money from investors for his new real estate startup – but some venture capitalists are backing down from the comeback plan.
After the news broke on Monday that Neumann’s new residential real estate start-up, Flow, had raised $350 million from prominent venture capital firm Andreessen Horowitz at a valuation north of $1 billion, several investors and tech founders reacted angrily.
“THIS IS DISGUSTING,” Kate Braddock, CEO of startup Switch and general partner of the W Fund, wrote on Twitter.
Braddock noted that the investment is the biggest check in the history of Andreessen Horowitz – and criticized the investment firm for backing a “straight white man” who is the “founder of one of the most more toxic than we have seen”.
Before Neumann stepped down as CEO of WeWork in 2019, he reportedly favored a “Brotherhood” atmosphere in the company smoke and drink frequently in offices. The company has also been hit with allegations that its the office culture encouraged sexual harassment.
Braddock said Andreessen Horowitz’s investment in Flow shows the venture capital firm is helping to “continue again and again a traditional system that favors a small, cohesive set of founders.”
Julia Austin, angel investor and lecturer at Harvard Business School, also wrote that the deal is a “strong signal from one of the best investors in the world that bad behavior (by simply [white male]) is not only tolerated, but rewarded.
Allison Byers, a tech investor and founder of a startup called Scroobius that seeks to diversify technology, wrote that she was “obviously outraged” by the news.
“It depends on how VC has evolved to operate,” Byers added in a LinkedIn post. “The generational bias is built in by the long-standing homogeneous composition of decision makers.”
Andreessen Horowitz co-founder Marc Andreessen nodded to 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 leveraging lessons learned. ”
“For Adam, the successes and lessons are many and we are excited to continue this journey with him and his colleagues to build the future of life,” added Andreessen.
Another well-known tech investor, Jason Calacanis, has floated the idea that Neumann’s new company – which is expected to start operating next year – might be a bad investment.
“If a startup is worth $1 billion before launching a product, it’s probably a scam,” Calacanis wrote in response to a tweet about the investment.
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 its new project are scarce, but Flow would involve 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 would offer its services to landlords in addition to owning certain apartments itself.
Neumann has already purchased over 4,000 apartments worth over $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 reached directly. A request sent to another such company, Flow Carbon, received no response.