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Andreessen Horowitz is now overtly courting capital from Saudi Arabia, regardless of U.S. strains.
According to Bloomberg, yesterday Marc Andreessen and Ben Horowitz appeared on stage with WeWork co-founder Adam Neumann to speak for at the very least the second time since November about their agency’s $350 million funding in Flow, which is Neumann’s new residential actual property firm. Their selection of venue was intentional: the convention was organized by a nonprofit backed by one in all Saudi Arabia’s largest sovereign funds, and Flow might launch within the Kingdom, says Bloomberg. Meanwhile, the three reportedly laid it on thick, with Horowitz praising Saudi Arabia as a “startup country” and saying that “Saudi has a founder; you don’t call him a founder, you call him his royal highness.”
Said Neumann individually: “It’s leaders like his royal highness that are actually going to lead us where we want to go.”
We’ve reached out to Andreessen Horowitz with associated questions this morning and have but to listen to again.
That a agency of Andreessen Horowitz’s measurement and pursuits is trying to cement relationships in Saudi Arabia isn’t stunning. Though the 14-year-old outfit has by no means made public who its restricted companions are, nobody would seize at their pearls have been it revealed that sovereign wealth funds from the area have helped increase the belongings beneath administration on the agency to $35 billion throughout its many funds. Back in October, Ben Horowitz spoke on the funding convention dubbed “Davos in the Desert” in Riyadh, which is often a clue that somebody is out there for more cash (or owes a backer a favor).
As for extra express associations, in 2016, each Andreessen Horowitz and Founders Fund bought a few of their share within the ride-share firm Lyft to Saudi Arabia’s Prince al-Waleed bin Talal and his Kingdom Holding. In 2017, Marc Andreessen additionally joined forces with the prince’s first cousin, Saudi Crown Prince Mohammed bin Salman (“MBS”), agreeing to hitch the advisory board of MBS’s bold undertaking Neom, a gaggle of futuristic tech-driven communities with its personal legal guidelines throughout “an area the size of Massachusetts,” because the WSJ has described it.
If Andreessen stepped off that very same board in 2018 after the CIA concluded that MBS ordered the ugly homicide of Washington Post columnist Jamal Khashoggi, he didn’t say. In equity, neither did Neom’s different high-profile advisory board members, together with Travis Kalanick, Sam Altman, or Apple’s then design chief Jony Ive. More broadly, not a single U.S. investor or startup founder with enterprise pursuits tied to Saudi Arabia spoke out throughout that extended chapter in 2018, whilst a Saudi-led army and financial battle on Yemen was additionally garnering headlines for its brutality.
All the whereas, loads of very huge U.S. companies have continued to conduct enterprise within the area. KKR and Saudi Arabia’s Public Investment Fund work collectively routinely; JPMorgan simply expanded its operations in Saudi Arabia late final 12 months.
Still, enterprise companies, which have a tendency to color themselves as extra virtuous than different asset suppliers with a view to win over founders, have been a bit quieter about their ties to the area. Which makes feedback made yesterday by Ben Horowitz on the Miami occasion all of the extra notable. From the story:
Onstage on the convention . . .Horowitz lamented that after Andreessen, the co-founder of their eponymous enterprise capital agency, had written a weblog put up in 2020 arguing it was “time to build,” it made waves, however not a lot modified within the U.S. “Probably 50 people in the U.S. government reached out to Marc to talk to him about it, and absolutely nothing happened,” Horowitz mentioned.
But when Horowitz visited Saudi Arabia in October and ate lunch with Saudi Princess Reema bint Bandar Al Saud, and extra lately, met with the governor of its sovereign wealth fund, Yasir Al-Rumayyan, they have been enthusiastic.
Al-Rumayyan informed him, “Let’s go,” and “within a week we had a half dozen really interesting meetings set up,” Horowitz mentioned. “In April, we’re bringing our companies out to Saudi. And that’s what a startup feels like.”
In so overtly praising its connections in Saudi Arabia, Andreessen Horowitz seems to be aligning itself with different world funding companies which can be additionally unapologetic about their associations. If they’ll do it, so can we, would be the considering.
Andreessen Horowitz may additionally be betting that the U.S. can be compelled to rethink its relationship with Saudi Arabia regardless of its repressive regime. Consider: After President Joe Biden reluctantly visited MBS final summer season, asking him to decrease gasoline costs, MBS as a substitute hiked them throughout U.S. midterm elections in a present of energy.
Empowering MBS additional, in December, a U.S. federal courtroom additional mentioned it was dismissing a lawsuit in opposition to the crown prince over Khashoggi’s homicide, after he was named prime minister of Saudi Arabia by his father. (Though MBS was already the de facto ruler of the Kingdom, the transfer gave him immunity by the requirements of the U.S. State Department.)
Whether different influential enterprise companies comply with Andreessen Horowitz’s lead right here can be fascinating to see. Though the agency has in some ways reshaped the way in which the broader enterprise business operates, publicly aligning itself with a rustic that the U.S. continues to mistrust is a a lot larger gamble than, say, launching a standalone media property or leaping headlong into crypto.
MBS could also be making progress on a worldwide comeback, however U.S. issues abound as Saudi Arabia attracts nearer to China to develop a nuclear power program that the U.S. doesn’t need it to construct. That’s saying nothing of MBS’s pleasant relationship with Vladimir Putin, whose battle on Ukraine is believed to have already value tons of of hundreds of individuals their lives, or the humanitarian disaster in Yemen it created — one which the United Nations says is the largest on this planet.
It’s onerous to neglect, too, that enterprise is finished in another way in Saudi Arabia, regardless of how efficiently the area portrays its transformation.
Last summer season, according to the WSJ, after their followers drove two recreation firms to cancel sponsorship offers with Neom over Saudi Arabia’s human rights document, its CEO reportedly known as an emergency assembly to complain to his communications crew and ask why he wasn’t warned of the sport firms’ positions.
“If you don’t tell me who is responsible,” mentioned the chief, “I’m going to take a gun from under my desk and shoot you.”