Adam Neumann’s new rental-apartment startup recently received a $350 million investment from venture-capital firm Andreessen Horowitz. That big check came with an unusual catch.

Mr. Neumann, the co-founder and former chief executive of WeWork Inc., agreed to effectively hand over part of his vast real-estate holdings in return for the money, according to people familiar with the matter.

By investing in Flow, Andreessen Horowitz also acquired a stake in the building. It is very rare for a venture capital firm to actually receive thousands of apartment shares in exchange for investment. One reason is that very few venture firms own real estate.

The funding structure enhances Neumann’s stakes. who left When he left WeWork, he had an exit package of over $1 billion in cash and loans.

Now, if his new company fails, he’ll lose part of the small real estate empire he’s built over two years.

Andreessen Horowitz’s investment is the largest individual commitment in a funding round to date, transforming one of Silicon Valley’s most prominent venture capital firms into a de facto condominium owner.

The Covid-19 pandemic is creating new opportunities for the sector as apartment rents hit record highs in many cities and Americans are spending more time at home.

Neumann intends Flow to be like WeWork for rented apartments, offering lots of shared spaces and social activities to create a sense of community, according to people briefed on the matter. One of his aims is to appeal to workers who are stuck in their apartments and miss the camaraderie in the office. Neumann is also considering offering rewards to long-staying tenants, these people said.

His firm faces competition from many other startups, including one backed by Iconiq Capital LLC, a wealth manager with over $80 billion in assets.

Flo is the property owner, but there are plans to manage the apartments and offer management services to other landlords for a fee, according to people familiar with the matter. The company is in talks to take over management of the Fort Lauderdale, Fla., multifamily housing Society Las Olas, in which Neumann acquired a stake, the people said.

Iconiq-backed apartment manager Sentral was launched last year and currently oversees over 4,000 units. The company’s chief executive, John Slavett, was a former Neumann employee who served as a WeWork executive until early 2020. Appeal to a new generation of renters By providing many common amenities. The company offers one-year leases as well as short stays.

Unlike Flow, Sentral does not own real estate. So far, most of the units managed by Sentral are owned by Iconiq, Sentral’s majority investor, though the company plans to expand to other landlords.

When Neumann co-founded WeWork more than a decade ago, he offered short-term leases of furnished space and attracted tenants to beer kegs. Neumann has raised more than $10 billion of his money from investors, mostly including the SoftBank Group.

WeWork spent a lot of money on leasing, salaries, furniture and other expenses, leading to big losses.rear Failed Initial Public Offering Attempt WeWork narrowly escaped bankruptcy in the fall of 2019.Neumann was kicked out of the company concerns about his management style.

Neumann has dabbled in the apartment business before. While at WeWork, he launched his furnished housing venture called WeLive, where he opened two locations before closing. After he left his company, he began buying stakes in apartment complexes, according to people familiar with real estate records and affairs.

In 2020, we purchased a major stake in Alfred, a residential property management technology company. Neumann had regular discussions with company founders Marcella Sapone and Jess Beck about turning the company into a leading apartment brand, according to people familiar with the matter.

Alfred bought the property management business and Neumann instead went out on his own to compete with Alfred.