Prefab homebuilder Veev to shutter after funders abandon former ‘unicorn’
The startup, which had raised a total of around $600 million, failed to close a recent financing round
Veev, a Bay Area prefabricated construction startup that promised to reduce the time and cost of building new homes, has informed its employees that it will cease operations after achieving unicorn status only last year.
The company, which has offices in Hayward and Israel, said in a statement that the closure is due to the failure of a recent financing round by the startup, which was founded in 2008 and was once valued at more than a billion dollars. According to employee LinkedIn posts, the company laid off the majority of its 250 employees this week. Veev had only recently completed construction on its first single-family home, which it planned to launch in 2024.
With Bay Area land and construction costs skyrocketing, the company promised a faster and cheaper way to build infill housing. Rather than constructing a home entirely on-site, Veev built panels in their Hayward factory that included electrical wiring, plumbing, and other components. The panels could then be transported to a home site and assembled in about a month, rather than the seven months that traditional homebuilders typically take.
They benefited from SB 9, a new state law passed in 2021 that allowed owners of single-family homes to subdivide their lots or build two units where only one was previously permitted. Modular construction was viewed as a way for homeowners who wanted to take advantage of the new law to avoid the headaches.
However, warning signs that the company was in trouble began to emerge in recent years.
The company announced a $400 million funding round in March 2022. The initial $200 million was intended to fund a new factory where Veev would assemble panels for multifamily buildings. However, as interest rates rose and consumers demanded lower-density housing in the aftermath of the coronavirus pandemic, Veev decided to shift its focus from multifamily to single-family construction.
Veev backed out of a deal with homebuilding behemoth Lennar (one of the company’s main investors) to build a 102-unit attached home development in Northern California in November 2022. Around the same time, Veev laid off approximately 100 employees, accounting for one-third of its workforce.
The second half of the $400 million round was never completed. Following the company’s pivot, major investors such as Lennar backed out, according to Business Insider. The company attempted to raise additional funding and, when that failed, attempted to convince investors to fund them with a bridge loan — but they were unable to raise additional funds. The company had stopped paying interest on some of the loans it had taken out to finance property purchases as of November.
Lennar and Bond, two investors, did not respond to requests for comment.
Veev is not the first modular homebuilder to face difficulties. Menlo Park-based Katerra, which had received more than $2.4 billion from Softbank Group’s Vision Fund, declared bankruptcy in 2021.
