Andreessen Horowitz, otherwise known as a16z, the famed venture capital firm, has been making big bets in the software as a service market, recently investing in People.ai and Divvy Homes.
The investments on the part of the San Francisco-based venture capital firm comes amid a bevy of interest in SaaS companies. A handful has gone public so far in 2018 and the list of those queuing up for an IPO is growing.
Divvy Homes Changing Rent-to-Own
Earlier in October Andreessen Horowitz led an investment round in Divvy Homes, which is a real estate startup that wants to turn rent-to-own and fractional home ownership on its head. The San Francisco-based startup raised $30 million after launching earlier this year with $7 million in venture funding. Other participants in the Series A equity and debt round included Caffeinated Capital, Scifi Ventures, and DFJ. It marked the first investment for Andreessen in Divvy Homes although the other two are previous investors in the startup. With Divvy’s platform a buyer picks out the home for sale it wants and Divvy will purchase it. The buyer usually puts 2% of the home price down and then pays a monthly amount that includes rent and equity payments. The idea is that the equity portion increases the credit in the house with an aim to build up 10% equity in three years. The person at that point has the option to purchase the rest of the home with a mortgage with the credit going to the down payment. As part of the deal, a16z’s Alex Rampell gets a seat on the board. “We are very excited to partner with Divvy by leading their Series A,” Rampell said. “In the future, you will buy your house from, or sell your house to, a company due to the laws of comparative advantage. Divvy is powerful for several reasons: it blurs the lines between renting and owning, prevents renters from using up all their income on rent, and provides better alignment between both parties.”
People.ai Lands $30M Led By a16z
Blurring the lines of traditional businesses and processes seems to be a recurring theme with Andreessen's recent investments. Take People.ai, the AI platform company, that Andreessen Horowitz led a $30 million Series B round of funding in. LightSpeed Venture Partners, GGV Capital, and Y Combinator also invested in the startup. The funding is going to bankroll People.ai’s data science efforts, expand commercially and to acquire more customers. Its customers currently include Palo Alto Networks, Lyft, and Relic. A16z’s Peter Levine, a general partner, is joining the People.ai board.
People.ai is an AI platform that helps companies take advantage of the power of AI. The platform analyzes the data of a business and learns what sales activities will be the most successful and when to focus on which customer account. It captures all the sales, marketing and customer success activity across email, calendar, phone, and other systems to automate about 90% of all customer relationship management data entry. And just like a16z has high hopes for Divvy it's betting big success is coming to People.ai as well. “The unique combination of SaaS and machine learning finally enables organizations to automate data collection and apply that data to improving productivity and efficiency across sales, customer service, and marketing,” said Levine, when announcing the investment. “We’ve been impressed with the traction that the team has made with some of the largest organizations, and the combination of business acumen and technical capability of the leadership team.”