Veev, a tech-enabled prefab home building company known for its “plug-and-play” homes, is undergoing liquidation after an “abrupt cancellation of capital-raising initiative.”
The announcement of Veev’s closure comes as a shock to many, as the company initially resonated with investors and reached unicorn status (a term used to describe a startup company valued over $1 billion) last year.
According to reports, the company has raised $600 million in venture capital since its inception. However, a last-minute cancellation of its latest capital-raising initiative left Veev without the funding it needed to continue operations.
Here’s what you need to know about the situation:
What is Veev?
Formerly known as Dragonfly Group, Veev is a real estate technology and development company that designs and builds prefabricated homes that don’t require a traditional construction process and come packed with built-in smart-home technology.
Instead of building from the bottom up, Veev homes are comprised of preexisting components that are assembled wherever a home is being built.
Here’s how co-founder Dafna Akiva described Veev’s “construction” process to Israel21c earlier this year:
“It’s not only taking construction off-site; it’s no longer construction,” she said. “It’s manufacturing and assembly—like an appliance that comes to your house and all you have to do is plug it in.”
Essentially, Veev is what happens when a home building company meets a high-tech startup.
While the “Lego pieces” of every Veev home are built in California, the company’s research and design headquarters are located in Beit Hatextile, Israel—near Tel Aviv Beach. Over the company’s history, it has never developed real estate in Israel.
How much funding did it raise and from where?
As with most startups, Veev relied on venture capital funding from external investors. Since 2008, the company reportedly has raised $600 million in funding—$400 million of which was secured in March 2022, according to Tech Crunch.
Per Tech Crunch, 2022’s fundraising initiative—a Series D funding round—was led by BOND, with participation from LenX, Zeev Ventures, Fifth Wall Climate Tech, and JLL Spark Global Ventures. The $400 million secured in 2022 came shortly after Veev raised $100 million in a Series C funding round in 2021.
Why do prefab homes matter?
Prefab homes existed long before Veev brought its product to market as a faster, more affordable alternative to traditionally built dwellings. While a prefabricated home won’t save consumers any time or money with land entitlement and zoning, the savings come from labor, time, and carbon emissions.
Prefab homes are much faster to build, as the main components of the home only need to be snapped into place on-site. In an interview with The Associated Press, founders Amit Haller claimed that one Veev home takes a team of five people to assemble in a mere four weeks—that’s four times faster than the industry standard. The speed at which Veev could build new homes meant it could have played an integral role in tackling housing shortages across the United States.
While prefab homes also have a reputation of being energy-efficient and less invasive on the environment, Veev took their product to a new level by using alternative materials that left a much smaller carbon footprint.
Veev’s first material discovery was light gauge steel (LGS), which can be bent into shapes and used as an alternative to wood frames. However, the company’s crowning jewel of building material is high-performance surface (HPS)—a nanobead coating that resists germs, scratches, and stains. Veev used HPS as an alternative to stucco, wood, stone, brick, and tile.
Both LGS and HPS are more expensive than typically used building materials, but they’re much more sustainable and nearly zero-waste.
When and how did Veev start?
Veev’s official origin story begins in 2008. However, founders Haller and Ami Avrahami’s business relationship goes back even further.
Haller and Avrahami met in the early 2000s while working in Israel’s high-tech scene. Prior to starting Veev, Haller founded Butterfly Communications—a company that developed Bluetooth communications chips that were sold to Texas Instruments for $50 million in 1999.
After the sale, Haller went on to found IXI Mobile, which sought to reinvent the cellphone. Haller served as IXI Mobile’s CEO, while Avrahami served as its product manager. IXI Mobile shut down in 2008 during the global financial crisis.
Soon after, the pair found themselves in California with a few million dollars in hand. Taking advantage of the subprime mortgage crisis in the United States, the pair decided to revive Butterfly as a real estate investment company and began buying up foreclosed properties for a fraction of their initial valued price. By 2010, Butterfly had renovated and operated approximately 200 residential units in Solano, Sacramento, and Fresno, California.
Once prices returned to normal in the United State, Haller and Avrahami changed the company name to Dragonfly Group and focused on multifamily deals and flipping residential properties. Within a few years, Dragonfly was building new single-family and multifamily developments.
By 2013, the company managed approximately 1,200 units and shifted its primary focus to new development of high-end single-family and multifamily homes, including a 406-unit complex.
As Dragonfly expanded its operations into more teardowns and multifamily developments, the pair became exhausted by long permit processes and even longer construction times due to labor shortages.
Here’s how Avrahami described the building process to Haaretz in 2020:
“The permitting and zoning process is very political, and the neighbors often submit objections to the construction because they fear any changes to the environment,” he said. “In small towns, the mayor doesn’t want to fight with anyone, so he sends the developers to compromise with the tenants, and that’s never simple. As soon as our plan was approved, the costs doubled—then you have to go back to the bank and ask for more credit, and you have to reconsider whether the construction project is worthwhile.”
Frustrated with the situation in California, Haller and Avrahami decided they needed to come up with a solution to build homes faster and more efficiently without relying on a traditional workforce or sacrificing on quality. Thus, the Veev modular home was born.
What comes next?
While Veev has entered the liquidation phase and laid off its U.S.-based employees, that doesn’t necessarily mean the company is shut down forever.
In a statement Veev said:
“The current entity of the company will be closed in the coming days and transferred to an assignee who will be in charge of the assets and their sale in the U.S. In the meantime, until a buyer is found for the assets, the company’s operations will continue. At this stage, the company’s employees in Israel will continue to work.”
As the future of the company remains uncertain, some Israeli news sites claim that there’s already an offer to purchase Veev. Calcalist, a prominent Israeli news publication, claims that Lennar put down an offer to purchase the company’s assets on Nov. 29.
“Tonight, an offer to purchase the company’s assets was submitted by the real estate company Lennar (Lennar), which is traded at a value of 40 billion dollars on the NYSE. Lennar, which is also the largest investor in the company, submitted a purchase offer as part of the liquidation procedure that Veev entered last week.” (Translated from original Hebrew)
BUILDER reached out to Lennar for comment, but the company has not responded.
