Photo: WeWork founder Adam Neumann and Rebekah Neumann on April 24, 2018 in New York City. (Photo by Taylor Hill/FilmMagic)
Adam Neumann co-founded New York-based co-working spaces, in 2010. It had a fast rise, expanding first with several locations nationwide before going global. But then several missteps by Neumann caused the company to implode. Despite this, Neumann has once again attracted major investment for yet another idea. This isn’t sitting well with many in Black America since Black founders are so often let out of the funding look let alone get another shot.
In 2019 WeWork has agreed to a bailout from Tokyo-based SoftBank in a deal that valued WeWork between $7.5 billion and $8 billion, CNBC reported. At its peak, WeWork was valued at some $47 billion. Then came a botched public offering in 2021. Neumann’s rise and fall has been documented in books, documentaries, and even a television series.
Yet, despite this massive collapse famed Venture capital firm Andreessen Horowitz (a16z) is investing about $350 million into Neumann’s new company, Flow. Flow says it wants to transform the residential rental real estate market. The investment is the largest individual check Andreessen Horowitz has ever written in a round of funding to a company, values Flow at more than $1 billion before it even officially launched, The New York Times reported. Flow is expected to open in 2023.
It’s a second shot for Neumann. Andreessen Horowitz co-founder Marc Andreessen wrote in a statement that “we love seeing repeat-founders build on past successes by growing from lessons learned.”
In 2020, venture capital investors pumped $150 billion to startups, but only approximately 1 percent of those funds went to Black founders, Accenture reported.
Twitter responded to Neumann’s new investment injection.
“VCs explaining how they only invest in the best ideas which is why women get 2% of VC funding and Black founders 1.7% but the WeWork guy has raised almost half a billion in 2 months for 2 different startups,” Dave Obassanjo tweeted.
“Amount that ALL startups with Black founders in the US raised in Q2 2022: $324M Amount that one white man raised from A16Z for a yet-to-be-built company: $350M,” tech entrepreneur Rebekah Bastian tweeted.
“Imagine a Black executive who’s publicly fired with a $425M payout, she’s the subject of a TV series and books about her failed leadership… then she gets $350M to start a new company. Wouldn’t happen, I insist,” tweeted Shaun R. Harper. Harper is a scholar on racial equity and is a Professor in the Rossier at the University of Southern California. Harper wrote about Neumann’s “$350 million do-over” in Forbes.
“$350M investment in a real estate startup may have “headline inflation” that benefits the founder and financial engineering of the lead investment firm. To reduce the inflation, you need to know how much real estate equity is underneath that, probably $150M+,” tweeted Moguldom Nation CEO Jamarlin Martin.
Martin added, “You could be out there reading inflated, financially engineered headlines thinking someone is taking $350M of risk when they actually are not taking any risk or minimal risk. These investors could have first claim on the real estate equity to get the new ponzi, FIRED UP.”
Photo: WeWork founder Adam Neumann and Rebekah Neumann attend the 2018 Time 100 Gala at Frederick P. Rose Hall, Jazz at Lincoln Center on April 24, 2018 in New York City. (Photo by Taylor Hill/FilmMagic)
