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Struggles with investment led Veev to its breaking point – Calcalist reports
California proptech developer Veev is crumbling after hitting $1 billion valuation last year, amid challenges in the housing market and one investor's alleged chase for its assets.
Last week, Veev launched liquidation per California laws and began to lay off its employees. More details were revealed by Calcalist, including that Veev's largest backer is pursuing assets in the bankruptcy-like process.
In the spring of 2022, Veev announced it secured $400 million in Series D funding; it was this significant sum that bumped the company’s valuation to unicorn status. San Francisco-based private equity firm Bond led that round, with existing investor Len X, a fund of real estate giant Lennar, also participating. Other investors were Zeev Ventures in Palo Alto, sustainable real estate investor Fifth Wall Climate Tech, and proptech backer JLL Spark Global Ventures.
However, according to the Calcalist report, Veev only received half of the sum initially, with the second half set to disburse in March 2023.
Meanwhile, the housing affordability diminished further with the rate hikes: home prices surged 30% since 2020, and sales declined 15% from a year ago. Mortgage rates are at their 23-year high of 8%. And while experts like Bankrate are saying the housing market is not going to crash, some are also saying that the current shortage won't let the price go down.
The changes in the real estate market led Veev to alter its strategy and focus on private homes rather than high-rise construction. As a result, some investors backpedaled on the remaining funding of $200 million. A series of consequent steps led Veev to scramble for capital – and Lennar, which first agreed on a loan arrangement, canceled at the last minute and urged the former unicorn to start liquidation.
Calcalist dives deeper into the details after communicating with Veev, but in short, Lennar would get hefty discounts for the assets and other investors get nothing should the deal go through.
“In light of the current market situation in Israel and around the world, it was not possible to raise money any other way, and therefore the current entity of the company will be closed in the coming days and transferred to an assignee,” Veev told Calcalist. Today, only Veev’s team in Israel continues to work.
Headquartered in Hayward, California, Veev was founded in 2008 by Israeli entrepreneurs Amit Heller, Ami Avrahami, and Dafna Akiva. Formerly called Dragonfly Group, the company launched as a real estate developer, then reformed to focus on new construction technologies for prefab properties around the Bay Area, from accessory dwelling units (ADUs) to multi-family and private homes. In 2017, it became its own general contractor for modular fabrication, setting up R&D labs and introducing new materials.
In 2020, Veev participated in municipal projects including building housing for homeless persons together with Habitat for Humanity. Addressing the housing crisis, Veev aimed to provide homes faster and at lower costs, with the sustainability factor in mind.
Among the company’s proprietary innovations were closed-wall panel systems with waterproofing, insulation, and exterior thermal breaking. These were put together at Veev’s digital fabrication facility to later lock into place and make a home with built-in mechanical, electrical and plumbing (MEP) systems included and topped with acrylic finish.
If the U.S. real estate market hadn’t turned sour in 2023, Veev could have better chances at securing capital. Last year, as the company announced its big funding round, CEO Haller said he expected to reach profitability “within two years.”
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