Mr. Neumann, who has purchased more than 3,000 apartment units in Miami, Fort Lauderdale, Atlanta and Nashville, aims to rethink the rental housing market by creating a branded product with consistent service and community features. Flow will own and operate the properties Mr. Neumann had bought and also offer its services to new developments and other third parties. Exact details of the business plan could not be learned. (Flow is unrelated to the crypto company Flowcarbon, which was also co-founded by Mr. Neumann and raised $70 million in May in a round led by Andreessen Horowitz.)
It appears Mr. Neumann’s business will follow a very different model than WeWork, which involved renting office space on a long-term basis and then re-renting it to clients at higher rates for shorter terms. This created its own risks if WeWork was unable to find renters.
In the case of Flow, the business 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.
The investment thesis for Flow appears to reflect economic and social trends that are driving more people to rent homes rather than buy them at a time when there is a housing shortage. A third of Americans rent their homes, and more than half of Americans living in urban settings are renters.
Mr. Neumann made a brief foray into the residential real estate market during his time at WeWork. The company created a division called WeLive that offered short-term rentals and experiences. The business was derided as a social experiment run amok and quickly shut down, one of a few divisions — like WeGrow and Rise by We — that took WeWork away from its core focus. Mr. Neumann has said that the company expanded into too many areas too quickly.
The investment in Flow, while large by venture capital standards, is still far smaller than the $9 billion that Masayoshi Son, the founder of SoftBank, invested in WeWork with the mandate for Mr. Neumann to grow the company as quickly as possible. When WeWork nearly collapsed, Mr. Son invested another $9 billion in the company to shore up its finances, leading to Mr. Neumann’s ouster.