Can This Israeli Startup Fight Alienation and Loneliness and Turn a Profit in the Process?

Venn establishes non-virtual communities for a fee, and its business model includes inflating property values in low-income neighborhoods. Is this the right way to build community?

The founders of Venn, from left to right: David Sherez, Chen Avni and Or Bokobza.
Kfir Ziv

On the way out of Venn’s new office in south Tel Aviv’s Shapira neighborhood, not far from the grungy monolith of the Central Bus Station, company CEO Or Bokobza walks us to the kitchenette so we can bring our coffee cups to the sink. “This is one of the hottest topics these days in our community in Shapira,” he confesses. “Over those few cups left in the sink at the end of the day. Even though everyone says they wash theirs.”

“It might sound trivial, but it’s a basic thing when you’re trying to build a community – to define what the members need to do and what can be paid for,” he explains, admitting that he is of the camp that would prefer to pay a little more so a cleaner could come more often, enabling company members could focus more on the main objective: community development. Meanwhile, others see washing dishes as an inseparable part of that.

This little debate is a good reflection of the company’s quest to sell a platform for managing community life in the big city. Since its founding 2017, Venn has raised $40 million from big investors like Bridges and Pitango, but still can’t easily explain just what it is that the company sells. Is it real estate, technology or sociology? And how much control does it have in the communities where it operates?

As in the early days of Facebook and WeWork, Venn co-founders Bokobza, David Sherez and Chen Avni are trying to sell a product connected to community. Venn identifies up-and-coming neighborhoods in big cities (Shapira in Tel Aviv; Bushwick in New York; Friedrichshain in Berlin), signs long-term (10-20 year) management agreements with numerous property owners in the area, renovates and furnishes buildings and their common spaces, and handles renting the property. The startup also gets involved in operating businesses, like restaurants and coffee shops.

The kitchen of a Venn apartment in Shapira in south Tel Aviv.
Iftah Shavit

Once it has established a foothold in the neighborhood, Venn builds shared work spaces, music practice spaces, dance studios and other spaces in accordance with the community members’ needs. In Shapira, Venn operates a pub and an anthroposophical preschool; community members can obtain discounts at local businesses through its app. All of the company’s apartments, facilities and events are managed on a dedicated smart platform, enabling Venn to shape the neighborhood’s character.

As for the business model, company data show that the property owners who work with Venn gain a 3-5% annual increase in yield from rent. In Shapira, a “rebranding” of the neighborhood has led to 7% higher rental prices overall. Until quite recently, the neighborhood was considered problematic and it wasn’t always easy to attract good tenants. For the properties Venn maintains, within 10 years they are upgraded and increase in value without any investment from the owners. Venn is committed to asking the highest possible price – in keeping with the market – each time a new tenant signs a rental contract.

The rooftop of a Venn apartment in Shapira in south Tel Aviv.
Iftah Shavit

A Venn community member living in one of the startup’s apartments gets a stable rental contract with no surprise rent increases. When it’s necessary, they can get services at the touch of a button. And certainly there’s the benefit that comes from being part of the community. In addition to tenants, those who pay a membership fee (350 shekels a month in Tel Aviv, $150 a month in New York and 100 euros a month in Berlin) also get access to the company’s shared spaces, resources and events.

Has Venn found the key to creating a non-virtual community in an age of loneliness and alienation? Or is its product just intended for those with means – or worse, for real estate sharks set on inflating housing prices in poor neighborhoods? It depends on whom you ask.

A positive influence?

Venn earns money from its membership fees and the properties it manages, as well as from the management fees it receives from property owners. But the founders say the real aim is “to have a positive influence on the neighborhood and community.” And who decides what this will be? Venn’s employees, and those willing and able to pay the membership fees.

Venn’s critics say a community already existed in Shapira before the company arrived, and that the “commercialization” of the neighborhood is hurting its natural dynamic and pushing people out.

“To be part of the community, you have to bring a desire to respect what already exists in the neighborhood, respect for the local population and most of all, a desire to live in a way that is bigger than me and my narrow life,” Bokobza says.

And you have to bring money.

“Yes, you have to pay the monthly membership fee to be part of the community. But if someone comes knocking and says, ‘I want to be part of the community but I don’t have the money,’ we’ll find a way to make it happen. We try to think about how to live among and help the people around us.”

A music night organized by Venn community members, hosted in a Venn rehearsal space, June 2019.
Yuval Cohen

How, for example?

Bokobza: “In the building next door to our office there are two bars where migrant workers and refugees in the neighborhood come to drink and hang out at night. Sometimes people get drunk and there is aggressive behavior. We had a dilemma what to do about it, and we said, ‘Let’s work with them.’ … We could have offered to take over these properties and told them bye-bye, but we decided we’d rather cooperate with them and give them an opportunity to earn income at our future events, by selling alcohol to us, for instance, and we will explain to them that their behavior sometimes creates discomfort. We believe their presence and the diversity in the neighborhood improve the quality of life in Shapira. In the properties we manage, if five out of eight apartments in a building are occupied by families that have been there for years, we won’t change the terms or the price even after our renovations.

“When we came to Shapira, we felt we had an opportunity to realize our old dream. Yes, we’ve made mistakes, but that’s part of the deal.”

What’s the dream?

“To continue being part of a community – like what I experienced on the moshav where I grew up, or in my army unit. In 2015, when we first came to Shapira’s small streets and I saw a huge lemon tree and chickens crossing the road, I knew that despite all the complexities of this neighborhood, this is where we could build our life together.”

How did it go from falling in love with a neighborhood to a mechanism that tells other people how to live their lives?

“At some point we printed out a giant map of the neighborhood and drew on it everything that we thought a neighborhood that provides a real living experience should have. To our surprise, we discovered that many people wanted what we came to call NAS – Neighborhood as Service. In 2017 we realized that we wanted to maintain a platform and service that would help people build their neighborhoods. Within five years we will build a platform for more than 100 neighborhoods, with each preserving its identity and character.”

This platform is relevant to the needs of young people and young families, but not necessarily the longtime, low-income residents of Shapira, who for years lived next to prostitutes and junkies, and later, Eritrean refugees.

Community members pack food for families in need in the Shapira neighborhood in south Tel Aviv as part of a Venn initiative, June 2019.
Netanel Tobias

“Even if there is no social justice, that’s not a reason to stop fighting for it. We’re a group of people that gets up in the morning and wants to make the world a better place. The alternative is to do nothing. To just sit by and wait for someone else to do it for us. We’re not that way, and we believe that the neighborhood benefits from it too.”

Do investors get it?

“It was hard at first. It wasn’t until we stopped apologizing and said, ‘We are a company that does good and also makes money,’ that it happened. Saying it out loud for the first time was liberating.”

The Impact Economy

“In recent years, the desire to connect businesses with philanthropy has spawned a new type of company, and the main challenge is to raise money at the start, when the companies are not profitable,” said Yoocan Technologies CEO and founder Moshe Gaon at TheMarker’s recent business and innovation summit. “Israel lags behind the world in social impact [economics], but there are a handful of people fighting to change that. In Europe there are 100 times more investment funds of this kind. Israeli investors aren’t very interested in social issues.”

Venn sees itself as an impact company interested not just in the bottom line, but in making a positive difference. “An impact company is basically a company whose product or service aims to solve one of the humanity’s greatest challenges,” says Lianne Pollak-David, Venn’s VP for strategy and business development, who also holds the company’s impact portfolio. “The best way to look at it is to get inspiration from the UN’s Sustainable Development Goals. If your company is addressing one of those goals, it could be an impact company. We are addressing Goal Number 11 – ‘sustainable cities and communities.”

“It’s not just about environmental sustainability, but about the living standards,” says Pollak-David, “that no one should live in a house without heating, for example, or about the ability to connect people who live in the community and reduce their loneliness.”

The company’s latest report found a 33-percent decrease in the loneliness level of members of the Shapira community, based on their self-reported responses. “We didn’t anticipate such a significant decrease so quickly. It made us realize we’re going in the right direction,” Pollak-David says.

Vini, can you fix my clogged toilet?

As part of the services it provides, Venn developed an app through which tenants can order laundry and cleaning services, report problems and arrange for repairs. It can also be used to reserve one of the common spaces for a private or social event. “We want to reduce to a minimum the bureaucracy and logistics that people have to deal with,” says Bokobza. “That way we can encourage people to participate in the social life of the neighborhood.”

The app features Vini, a virtual personal assistant. Bokobza says that Vini can respond to the requests of 200 people in each neighborhood, and in the future will be able to respond automatically to 1,000 users.

Users’ activity on the app also enables the company to collect data about its members’ consumer habits, which can provide important information for its business activity – as well as for real estate developers and local authorities.

Venn has also developed technology to help it identify potential neighborhoods for its activity, taking into account things like demographic data, distance to workplaces, urban planning that preserves low-rise buildings and promotes a neighborhood character, safety and crime levels, number of coffee shops, average level of education, cultural venues and so on. “We do everything in-house with our own research department, because we have parameters that are unique to us and the way we build a community,” Bokobza says. “The process culminates with us physically going to the place and meeting with people – technology has no substitute for that.”