Andreessen Horowitz is now overtly courting capital from Saudi Arabia, regardless of U.S. strains.
Based on Bloomberg, 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 Movement, which is Neumann’s new residential actual property firm. Their alternative of venue was intentional: the convention was organized by a nonprofit backed by one in all Saudi Arabia’s largest sovereign funds, and Movement could launch within the Kingdom, says Bloomberg. In the meantime, the three reportedly laid it on thick, with Horowitz praising Saudi Arabia as a “startup nation” and saying that “Saudi has a founder; you don’t name him a founder, you name him his royal highness.”
Stated Neumann individually: “It’s leaders like his royal highness which can be truly going to steer us the place we need to go.”
We 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 seeking to cement relationships in Saudi Arabia isn’t surprising. Although the 14-year-old outfit has by no means made public who its restricted companions are, nobody would seize at their pearls had been it revealed that sovereign wealth funds from the area have helped increase the property underneath administration on the agency to $35 billion throughout its many funds. Certainly, again in October, Horowitz spoke on the funding convention dubbed “Davos within the Desert,” which is commonly a clue that somebody is fundraising.
As for extra specific 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 venture Neom, a gaggle of futuristic tech-driven communities with its personal legal guidelines throughout “an space the scale 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 grotesque homicide of a Washington Submit columnist, he didn’t share it. In equity, neither did a few of Neom’s different high-profile advisory board members, together with Travis Kalanick or Sam Altman. Solely then-Apple-design-chief Jony Ive disappeared from the listing almost as rapidly as he was added, with Apple calling his inclusion “a mistake.”
Memorably, not a single U.S. investor or startup founder with enterprise pursuits tied to Saudi Arabia spoke out towards MBS throughout that extended chapter in 2018, at the same time as a Saudi-led navy and financial battle on Yemen was additionally garnering headlines for its brutality.
All of the whereas, loads of very massive U.S. companies have continued to conduct enterprise within the area. KKR and Saudi Arabia’s Public Funding Fund nonetheless work collectively routinely. JPMorgan mentioned it deliberate to develop its operations in Saudi Arabia late final yr. Saudi Arabia’s sovereign wealth fund and BlackRock signed an settlement a couple of months in the past to collectively discover infrastructure tasks within the Center East.
But enterprise corporations, which have a tendency to color themselves as extra virtuous than different asset suppliers with a purpose to win over founders, have principally remained extremely secretive about any ties to the area. Which makes feedback made yesterday by Horowitz on the Miami occasion all of the extra notable. From Bloomberg’s 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 construct,” it made waves, however not a lot modified within the U.S. “In all probability 50 folks within the U.S. authorities reached out to Marc to speak to him about it, and completely nothing occurred,” Horowitz mentioned.
However 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 had been enthusiastic.
Al-Rumayyan instructed him, “Let’s go,” and “inside per week we had a half dozen actually attention-grabbing conferences arrange,” Horowitz mentioned. “In April, we’re bringing our corporations out to Saudi. And that’s what a startup looks like.”
So what has modified? The American economic system for one factor, the place U.S. corporations are proper now grappling with tighter lending and better inflation.
In so overtly praising its associates in Saudi Arabia, Andreessen Horowitz additional seems to be aligning itself with different world funding corporations which can be unapologetic about their relationship with the oil-rich area. If they’ll do it, so can we, would be the pondering.
Andreessen Horowitz can also be betting that the U.S. can be compelled to rethink its relationship with Saudi Arabia regardless of its repressive regime. Contemplate: After President Joe Biden reluctantly visited MBS final summer time, asking him to decrease gasoline costs, MBS as an alternative hiked them throughout U.S. midterm elections in a present of energy. Empowering MBS additional, a U.S. federal court docket in December dismissed a lawsuit towards MBS over the Submit columnist’s homicide after MBS was named prime minister of Saudi Arabia by his father. (MBS was already the de facto ruler of the Kingdom, however the transfer offers him immunity by the requirements of the U.S. State Division.)
Whether or not different highly effective enterprise corporations observe Andreessen Horowitz’s lead can be attention-grabbing to see. Although Andreessen Horowitz has in some ways reshaped the way in which the broader enterprise trade operates, publicly aligning itself with Saudi Arabia is an even bigger gamble than, say, launching a standalone media property or leaping headlong into crypto.
Whereas MBS could also be making progress on a world comeback, U.S. considerations proceed to abound as Saudi Arabia attracts nearer to China to develop a nuclear vitality 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 price lots of of hundreds of individuals their lives — or of Yemen, the place the Kingdom’s battle created what’s now the biggest humanitarian disaster on the earth.
It’s value remembering, too, that enterprise is finished in a different way in Saudi Arabia, regardless of how aggressively the area portrays its transformation.
In a single telling instance, final summer time, based on the WSJ, after their followers drove two sport corporations to cancel sponsorship offers with Neom over Saudi Arabia’s human rights file, Neom CEO Nadhmi al-Nasr known as an emergency assembly to complain to his communications group and ask why he wasn’t warned of the sport corporations’ positions.
“When you don’t inform me who’s accountable,” mentioned the chief, “I’m going to take a gun from underneath my desk and shoot you.”