Andreessen Horowitz is now openly courting Saudi capital, despite US pressure

Andreessen Horowitz is now openly courting Saudi capital, despite US tensions.

According to Bloomberg, Marc 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 company’s $350 million investment in Flow, which is 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 made public who its limited partners are, no one would grab their pearls if it were revealed that the region’s sovereign wealth funds have helped lift the assets under management of the company to $35 billion across 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 MBS’s ambitious Neom Project, a group of futuristic communities focused on technology with its own laws across “an area the size of Massachusetts,” as the WSJ described it.

If Andreessen quit that same board in 2018 after the CIA concluded MBS ordered the gruesome murder of Washington Post columnist Jamal Khashoggi, he hasn’t shared it. In fairness, neither did the other members of Neom’s high-level advisory board, including Travis Kalanick or Sam Altman. (Only Jony Ive, then Apple’s chief design officer, 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 Saudi-related business interests spoke out against MBS during this long chapter in 2018, even as a military and economic war waged by the Saudi Arabia vs. Yemen was also making headlines for its 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 regularly work together. JPMorgan just expanded its operations in Saudi Arabia late last year. The Saudi sovereign wealth fund and BlackRock signed an agreement a few months ago to jointly explore infrastructure projects in the Middle East.

Yet venture capital firms, 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 ties to 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 reluctantly visited MBS last summer, asking him to lower gas prices, MBS instead raised them during the US midterm elections in a demonstration 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. Although 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. than, say, launching a standalone media property or going 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. This is to say nothing of MBS’s friendly relationship with Vladimir Putin – whose war against Ukraine has already claimed hundreds of thousands of lives – or the humanitarian crisis in Yemen it has created, which, according to the United Nations, is now the largest 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 WSJ, after their fans pushed two game companies to cancel sponsorship deals with Neom over Saudi Arabia’s human rights record, its CEO allegedly called a meeting to urge to complain to his communications team and ask why he wasn’t warned about the game companies’ positions.

“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.”