The Saudi government plans to create a fund worth about $40 billion to invest in artificial intelligence, according to three people briefed on the plan. It's the latest sign of a technology gold rush that's already starting to reshape the way people live and work.
Representatives of Saudi Arabia's Public Investment Fund have been working with Andreessen Horowitz, one of Silicon Valley's leading venture capital firms, and other financiers in recent weeks, according to the people, who were not authorized to speak publicly. The company has been discussing the possibility of partnering with vendors. They warned that plans were still subject to change.
The planned technology fund will make Saudi Arabia the world's largest investor in artificial intelligence. It will also showcase the oil-rich country's global business ambitions and efforts to diversify its economy and position itself as a more influential player in geopolitics. The Middle Eastern country pursues these goals through a sovereign wealth fund with more than $900 billion in assets.
Saudi fund officials are wondering what role Andreessen Horowitz (already an active investor in the AI ​​space and whose co-founder Ben Horowitz is friends with the fund's president) could play and how They discussed how the fund would work, the officials said. The $40 billion target is far below what U.S. venture capital firms typically raise, surpassed only by Japanese conglomerate SoftBank, which has long been the world's biggest investor in startups. Dew.
A Saudi tech fund being set up with the backing of Wall Street banks would be the latest entry into a field already flush with money. The global frenzy around artificial intelligence is driving up valuations of private and public companies as bullish investors race to find or build the next Nvidia or his OpenAI. For example, the startup Anthropic raised more than $7 billion in just one year, a huge amount of funding that is virtually unprecedented in the world of venture capital.
The cost of funding AI projects is high. OpenAI CEO Sam Altman has reportedly asked the United Arab Emirates government for large sums of money to accelerate manufacturing of chips needed to power AI technology.
According to reports, Saudi Arabian representatives are appealing to potential partners to develop technologies related to artificial intelligence, including chip makers and expensive, large-scale data centers that the country will increasingly need to drive next-generation computing. He said he was looking to support a series of technology startups. The four people knew about those efforts but were not authorized to speak publicly. The company is also considering starting its own AI company.
Two of the people said a new Saudi investment drive is likely to begin in the second half of 2024. The $40 billion fund could put both the Saudi government and Andreessen Horowitz at the center of a race to corner various companies related to the sector.
Mr. Horowitz and Public Investment Fund President Yasir Al-Rumayyan discussed the possibility of the Silicon Valley company setting up an office in the capital, Riyadh, a person familiar with the conversations said.
Other venture capitalists may also join the Saudi tech fund, according to two people briefed on the plans.
The international business community closely monitors the public investment fund, which was established in 1971, partly because of its enormous economic influence and growing ambitions.
In 2018, as Saudi Arabia was becoming a major destination for investment firms and entrepreneurs seeking financial aid, Saudi agents murdered dissident journalist Jamal Khashoggi in the kingdom's Istanbul consulate. It appeared to temporarily tarnish the country's reputation among international financiers. .
In 2022, the Saudi government invested billions of dollars in companies run by former President Donald J. Trump's son-in-law Jared Kushner and others in what many saw as a political move. One recent deal to merge upstart LIV Golf and the PGA Tour has angered golfers, but the deal is also controversial because of Saudi Arabia's human rights record.
Saudi Arabia, which spent $3.5 billion on Uber in 2016, has largely struggled with technology investments. Handed over $45 billion to SoftBank for the Japanese company's $100 billion Vision Fund, which funneled the money into dozens of companies, including bankrupt real estate company WeWork and other failed startups such as robotic pizza maker Zume. It was.
Many in Silicon Valley and Wall Street welcome the return to national membership. Horowitz hosted Al Rumayyan during this year's Super Bowl, according to two people briefed on his activities.
The two spent time together before and after games, with Mr. Horowitz showing Mr. Al-Rumayyan around his settled city of Las Vegas and introducing investors to his friends in music and sports, the people said. .