It’s often discussed that investors are more willing to invest in an entrepreneur who has failed before, rather than one who is starting a business for the first time.
This is because the entrepreneur who has failed has felt pain. They’re battled hardened. They know what mistakes to avoid. These things—in theory—make them more likely to succeed, and increase the probability investors make money on their investment.
I was surprised today though to read about WeWork Founder Adam Neumann’s recent fundraise from a16z, the most prestigious venture capital firm in the world.
Neumann failed. Big time. Under his leadership, WeWork raised $21 billion, and its current market capitalisation is $4 billion.
Yet a16z was willing to write their biggest cheque ever, at $350 million, to fund Neumann’s new residential real estate company focused on rentals. Neumann’s new company is now valued at over $1 billion, and it hasn’t even commenced operations yet.
I don’t get it. At all.
This is one of those posts where I publish, and will likely return to in a year or two.
Let’s see how things shake out.