Andreessen Horowitz is now openly courting Saudi capital, despite US tensions.
According to BloombergMarc Andreessen and Ben Horowitz appeared on stage with WeWork co-founder Adam Neumann to talk for at least the second time since November about their business $350 million investment in Flow, Neumann’s new residential real estate company. Their choice of venue was intentional: the conference was hosted by a nonprofit organization backed by one of Saudi Arabia’s largest sovereign wealth funds, and Flow may launch in the Kingdom, according to Bloomberg. Meanwhile, the three reportedly went all out, with Horowitz praising Saudi Arabia as a “start-up country” and saying “Saudi Arabia has a founder; you don’t call him a founder, you call him his royal highness.
Neumann said separately: “It’s leaders like His Royal Highness who are actually going to get us where we want to go.”
We contacted Andreessen Horowitz with related questions this morning and have yet to receive a response.
That a company of Andreessen Horowitz’s size and interests is seeking to cement relations in Saudi Arabia is not shocking. Although the 14-year-old outfit has never gone public who their limited partners are, no one would take their pearls if it was revealed that sovereign wealth funds in the region have helped increase the company’s assets under management for $35 billion through its many funds. In October, Ben Horowitz spoke at the investment conference dubbed “Davos in the Desert” in Riyadh, which is usually a clue that someone is in the market for more money (or owes a favor to a funder).
As for more explicit associations, in 2016 Andreessen Horowitz and Founders Fund sold part of their stake in ride-sharing company Lyft to Saudi Prince al-Waleed bin Talal and his Kingdom Holding. In 2017, Marc Andreessen teamed up with the prince’s first cousin, Saudi Crown Prince Mohammed bin Salman (“MBS”), agreeing to join the advisory board of the ambitious MBS project. Neoma group of futuristic tech-driven communities with their own laws in “an area that massachusetts sizeas the WSJ described it.
If Andreessen left this same council in 2018 after the CIA concluded that MBS ordered the gruesome murder of Washington Post columnist Jamal Khashoggi, he did not share. In fairness, neither did the other members of Neom’s high-level advisory board, including Travis Kalanick or Sam Altman. (It was only Jony Ive, then Apple’s chief design officer, who disappeared from the list almost as quickly as he was added, with Apple calling his inclusion “a mistake. »
More generally, not a single American investor or startup founder with business interests linked to Saudi Arabia spoke out against MBS during this extended chapter in 2018, even as a Saudi-led military and economic war against Yemen was also make the headlines for his brutality.
Throughout this time, many very large American companies continued to do business in the region. KKR and the Public Investment Fund of Saudi Arabia work systematically together. JPMorgan comes expanded its operations in Saudi Arabia at the end of last year. The Saudi Sovereign Wealth Fund and BlackRock signed an agreement a few months ago to explore infrastructure projects together in the Middle East.
Yet VCs, which tend to portray themselves as more virtuous than other asset providers in order to win over founders, have been a little more muted about their links with the region. Which makes the comments Ben Horowitz made yesterday at the Miami event all the more notable. From the Bloomberg story:
On stage during the conference. . .Horowitz lamented that after Andreessen, the co-founder of their eponymous venture capital firm, wrote a blog post in 2020 claiming it was “time to build,” it made waves, but not much changed in the US “Probably 50 people in the US government contacted Marc to tell him about it, and absolutely nothing happened,” Horowitz said.
But when Horowitz visited Saudi Arabia in October and had lunch with Saudi Princess Reema bint Bandar Al Saud, and more recently met with the governor of its sovereign wealth fund, Yasir Al-Rumayyan, they were enthusiastic.
Al-Rumayyan said to him, “Let’s go,” and “in one week we held half a dozen really interesting meetings,” Horowitz said. “In April, we bring our companies to Arabia. And that’s how a startup feels.
In so openly praising his Saudi Arabia connections, Andreessen Horowitz appears to be aligning himself with other global investment firms who also don’t apologize for their associations. If they can do it, so can we, maybe the thought.
Andreessen Horowitz can also bet that the United States will be forced to reconsider its relationship with Saudi Arabia despite its repressive regime. Consider: After President Joe Biden unwillingly visited MBS last summer, asking him to lower gas prices, MBS instead raised them during the US midterm elections in a show of power.
Clearing MBS further, in December, a US federal court further said it was dismissing a lawsuit against the crown prince for the murder of Khashoggi, after he was appointed prime minister of Saudi Arabia by his father. (Although MBS was already the de facto ruler of the Kingdom, the move gave him immunity under US State Department standards.)
It will be interesting to see if other powerful venture capital firms follow Andreessen Horowitz’s lead. While the firm has in many ways reshaped the way the broader venture capital industry operates today, publicly aligning itself with a country the United States clearly distrusts is a much bigger gamble. that, say, the launch of a standalone media property or jump headlong into crypto.
MBS may be making progress toward a global comeback, but US concerns abound as Saudi Arabia moves closer to China to develop a nuclear power program the US does not want it to build. That says nothing about MBS Friendship with Vladimir Putin — whose war against Ukraine would have already cost hundreds of thousands people their lives – or the humanitarian crisis in Yemen it created, which the United Nations now says is the the biggest in the world.
It’s also hard to forget that business is done differently in Saudi Arabia, no matter how aggressively the region portrays its transformation.
For example, last summer, according to the WSJafter their fans pushed two game companies to cancel sponsorship deals with Neom over Saudi Arabia’s human rights record, its CEO reportedly called an emergency meeting to complain to his communications team and told him ask why he had not been warned of the positions of the gaming companies.
“If you don’t tell me who’s responsible,” the executive said, “I’m going to grab a gun from under my desk and shoot you.”
