Veev Acquisition Is Indication of Potential Proptech Reset
As investment support has fallen, companies might fall to the wayside with an increase in acquisitions.
When affordable housing construction tech company Veev started 15 years ago, it probably wasn’t with the thought of an ultimate collapse after $597 million in raised funds with investors like JLL Spark, according to Crunchbase.
California headquarters and R&D in Israel, the company’s website is still up, stating, “Our process includes digital architectural & structural design, full panelized manufacturing and on-site installation.” It was supposed to be a time- and money-saving approach to residential building at scale.
But as experience with tech companies shows, waves of funding and then reconsideration can result in companies left to sink. As Mercury News reported several weeks ago, Veev achieved unicorn status in 2022.
“The company, with offices in Hayward and Israel, said in a statement that the closure comes because the startup, which launched in 2008 and was once valued at more than a billion dollars, failed to close a recent financing round,” the paper wrote. “This week, the company laid off most of its 250 employees, according to LinkedIn posts from employees. Veev had only recently finished construction on its first single-family home, which the company intended to bring to market in 2024.”
Starting as a traditional developer, the firm turned toward prefab construction in 2018. Much has happened since then: the pandemic, many types of businesses ground to a halt, relatively high inflation, relatively high interest rates from the Fed to combat it. And as Crunchbase had reported, Veev isn’t in a class by itself. Multiple affordable housing construction businesses offered buildings that weren’t cheap. Veev’s buildings had run into the millions. Veev CEO Amit Haller told Crunchbase in 2022 that scale was needed to drive down costs. But, as Crunchbase reporter Joanna Glasner wrote, it’s tough to get scale when the initial products are so expensive.
Eventually, investors can get tired, especially when conditions result in venture capital companies hitting a 42.4% dip in funding for proptech. CTech, a tech news site run by Israel’s financial daily Calcalist, reported that Lennar has purchased Veev at a cost of “several dozen million dollars,” with plans to keep the R&D facilities in Israel. The takeover reportedly followed a three-week bridge loan to provided Veev when the company turned insolvent.
The conditions that caught up Veev haven’t disappeared. It may be the industry will hear of more collapses and forced acquisitions, none of which is unheard of when tech, especially the money sources, get pinched.