Andreessen Horowitz is now openly seeking capital from Saudi Arabia, despite tensions in the US.
According to BloombergMarc Andreessen and Ben Horowitz appeared on stage with WeWork co-founder Adam Neumann to at least the second time about their company since November $350 million investment in Flow, Neumann’s new residential real estate company. Their choice of location was intentional: The conference was hosted by a nonprofit backed by one of Saudi Arabia’s largest sovereign wealth funds, and Flow could be launched in the Kingdom, Bloomberg says. Meanwhile, the three reportedly laid it on thick, with Horowitz praising Saudi Arabia as a “start-up country” and saying that “Saudi has a founder; you don’t call him founder, you call him His Royal Highness.”
Said Neumann separately, “It’s leaders like His Royal Highness who are actually going to lead us where we want to go.”
We contacted Andreessen Horowitz this morning with related questions and have not heard back yet.
That a company of the size and interests of Andreessen Horowitz wants to strengthen relations in Saudi Arabia is not shocking. While the 14-year-old outfit has never made public who its limited partners are, no one would reach for them pearls where it was revealed that sovereign wealth funds from the region have helped increase assets under management at the company $35 billion about the many funds. Indeed, in October, Horowitz spoke at the investment conference called “Davos in the desert‘, which is often an indication that someone is looking for moolah.
As for more explicit associations, in 2016 both Andreessen Horowitz and Founders Fund sold part of their stake in the ride-share company Lyft to Saudi Prince al-Waleed bin Talal and his Kingdom Holding. In 2017, Marc Andreessen also joined forces with the prince’s cousin, Saudi Crown Prince Mohammed bin Salman (“MBS”), and agreed to join the advisory board of MBS’s ambitious project Neoma group of futuristic, technology-driven communities with their own laws in “an area that is the size of Massachusetts”, as the WSJ described it.
If Andreessen left that same board in 2018 after the CIA closed that MBS ordered the gruesome murder of a Washington Post columnist, he did not share. In fairness, neither did some of Neom’s other high-profile advisory board members, including Travis Kalanick or Sam Altman. Only then-Apple design chief Jony Ive disappeared from the list almost as quickly as he was added, and Apple called his inclusion “an error.”
Memorably, not a single U.S. investor or startup founder with business interests tied to Saudi Arabia spoke out against MBS during that long chapter in 2018, even as a Saudi-led military and economic war against Yemen was also underway . grab headlines because of his brutality.
All the while, many very large US companies continued to do business in the region, albeit relatively quietly for six months to a year. KKR and the Public Investment Fund of Saudi Arabia work regularly together. Just JPMorgan expanded its activities late last year in Saudi Arabia. The sovereign wealth fund of Saudi Arabia and BlackRock signed an agreement several months ago to jointly explore infrastructure projects in the Middle East.
Meanwhile, venture firms, which tend to portray themselves as more virtuous than other lenders to win over founders, have remained highly secretive about any ties to the region. That makes yesterday’s comments by Ben Horowitz at the Miami event all the more remarkable. 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 that 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 talk to 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 Sovereign Wealth Fund Governor Yasir Al-Rumayyan, they were thrilled.
Al-Rumayyan told him, “Let’s go,” and “within a week we had organized half a dozen really interesting meetings,” Horowitz said. “In April we will bring our companies to Saudi Arabia. And that’s how a startup feels.”
So what has changed? The US economy, for example, where US companies are currently struggling with tighter credit and higher inflation.
In so openly praising his friends in Saudi Arabia, Andreessen Horowitz seems further to join other global investment firms who are unapologetic about their relationship with the region. If they can do it, so can we, is the thought.
Andreessen Horowitz may also be betting that despite its repressive regime, the US will be forced to rethink its relationship with Saudi Arabia. Consider: After President Joe Biden hesitant visited MBS last summer and asked him to lower gas prices, MBS instead walked during the US midterm elections in a show of force. Further strengthening MBS, a US federal court in December said it further dismissed a lawsuit against MBS for the murder of the Post columnist, after MBS was appointed Prime Minister of Saudi Arabia by his father. (MBS was already the de facto ruler of the Kingdom, but the move gives him immunity by U.S. State Department standards.)
It will be interesting to see whether other powerful venture firms follow Andreessen Horowitz’s example. While Andreessen Horowitz has in many ways reshaped the way the wider venture industry operates, publicly affiliating with a country that outright distrusts the US is a much bigger gamble than, say, launching a independent media property or jump headlong into crypto.
While MBS may be making strides towards a global comeback, there are deep concerns in the US as Saudi Arabia moves closer to China developing a nuclear power program that the US is unwilling to build. That says nothing about MBSs friendly relationship with Vladimir Putin – whose war against Ukraine has reportedly already happened hundreds of thousands of people’s lives – or the humanitarian crisis in Yemen it caused, which the United Nations now says is the largest in the world.
It’s also hard to forget that doing business in Saudi Arabia is done differently, no matter how aggressively the region portrays the transformation.
In a telling example, last summer, said the WSJafter their fans pushed two game companies to cancel sponsorship deals with Neom over Saudi Arabia’s human rights filethe CEO reportedly called an emergency meeting to complain to his communications team and ask why he had not been warned about the game companies’ views.
“If you don’t tell me who’s responsible,” said the director, “I’ll grab a gun from under my desk and shoot you.”