An influential venture-capital firm has pledged major support to WeWork founder’s venture into residential real estate.
Venture capital firm Andreessen Horowitz has invested $350 million with WeWork founder Adam Neumann to create Flow—a residential real estate operation.
“We think it is natural that for his first venture since WeWork, Adam returns to the theme of connecting people through transforming their physical spaces and building communities where people spend the most time: their homes. Residential real estate—the world’s largest asset class—is ready for exactly this change,” co-founder Marc Andreessen says in his announcement.
Flow’s website doesn’t offer many details about the company except that it is expected to launch in 2023.
A New York Times article explains that Flow is “effectively a service that landlords can team up with for their properties, somewhat similar to the way an owner of a hotel might contract with a branded hotel chain to operate the property.”
Andreessen says that the mission of the company requires a “seismic shift in the way industry relationships are structured” and that they plan to “create a system where renters receive the benefits of owners.”
Why it’s news
The pandemic rattled real estate. Where people live and work has been dramatically transformed, but the industry has not changed with it. As the housing market remains complicated, rental housing is increasingly tough to find—renters struggle to secure feasible prices.
With higher mortgage rates, those looking to buy homes find their budget doesn’t stretch as far as it once did. Higher rates mean higher monthly payments, something consumers already getting hit with inflated grocery prices can’t handle. This pushes some into the rental market.
Over the last year, 60% of renters got an increase in their monthly rent, according to a survey by Freddie Mac. The median rent is now $2,000.
There has not been a significant disruption in residential real estate recently. Innovative solutions like Flow could be the answer to the housing crisis.
Backing up a bit
WeWork co-founder Adam Neumann is a controversial figure. Neumann made huge claims about the success of WeWork, only to have the initial public offering fizzle. Newmann resigned as CEO from WeWork in 2019.
“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. When you care for people at their home and provide them with a sense of physical and financial security, you empower them to do more and build things. Solving this problem is key to increasing opportunity for everyone,” says Andreesen.