Saudi Arabia plans a $40 billion investment in artificial intelligence
Saudi Arabia’s government plans to set up a roughly $40 billion fund to invest in artificial intelligence, according to three people briefed on the plans — the latest sign of the gold rush for a technology that has already begun reshaping the way people live and work.
In recent weeks, representatives of Saudi Arabia’s Public Investment Fund have discussed a possible partnership with Andreessen Horowitz, one of Silicon Valley’s top venture capital firms, and other backers, said the people, who were not authorized to speak publicly. They warned that plans could still change.
The planned technology fund would make Saudi Arabia the world’s largest investor in artificial intelligence. It would also spotlight the oil-rich country’s global business ambitions, as well as its efforts to diversify its economy and establish itself as a more influential player in geopolitics. The Middle East is pursuing these goals through its sovereign wealth fund, which has assets of more than $900 billion.
Saudi fund officials discussed the role that Andreessen Horowitz — already an active investor in AI and whose co-founder Ben Horowitz is friends with the fund’s governor — could play and how such a fund would work, the people said . The $40 billion target would dwarf the typical amounts raised by U.S. venture capital firms and would be eclipsed only by SoftBank, the Japanese conglomerate that has long been the world’s largest investor in startups.
The Saudi technology fund, which is being set up with the help of Wall Street banks, will be the latest potential entrant into an area already awash with cash. The global artificial intelligence frenzy has pushed up the valuations of private and public companies as bullish investors rush to find or build the next Nvidia or OpenAI. For example, startup Anthropic raised more than $7 billion in one year alone—a flood of money that is virtually unheard of in the venture capital world.
The costs of financing AI projects are high. OpenAI CEO Sam Altman reportedly did just that was looking for a large amount of money from the United Arab Emirates government to boost production of chips needed to power AI technology.
Saudi representatives have told potential partners that the country is looking to back a range of technology startups related to artificial intelligence, including chip makers and the expensive, sprawling data centers that are increasingly necessary to power the next generation of computers. according to four people with knowledge of these efforts, who were not authorized to speak publicly. It has even considered starting its own AI companies.
Two of the people said Saudi Arabia’s new investment push is likely to take off in the second half of 2024. A $40 billion fund could make both the Saudi Arabian government and Andreessen Horowitz key players in the race to corner several companies related to the field.
Mr. Horowitz and Yasir al-Rumayyan, the governor of the Public Investment Fund, have discussed the possibility of the Silicon Valley company setting up an office in the country’s capital, Riyadh, a person with knowledge of the talks said.
Other venture capitalists could join the kingdom’s technology fund, two people briefed on the plans said.
Partly because of its enormous financial strength and growing ambitions, people in international business circles are closely watching the moves of the Public Investment Fund, which was founded in 1971.
In 2018, just as Saudi Arabia was becoming a major destination for investment firms and entrepreneurs seeking financial support, the country’s agents murdered dissident Saudi journalist Jamal Khashoggi in the kingdom’s consulate in Istanbul, triggering a for a while seemed to damage the country’s reputation among international financiers. .
In 2022, the Saudi government invested billions in a company led, among others, by former President Donald J. Trump’s son-in-law, Jared Kushner, which was seen by many as a political move. One of the recent deals to merge the LIV Golf upstart with the PGA Tour drew the ire of golfers, but the pact is also controversial in part because of Saudi Arabia’s human rights record.
Saudi Arabia, which invested $3.5 billion in Uber in 2016, has largely struggled with technology investments. It handed SoftBank $45 billion for the Japanese company’s $100 billion Vision fund, which was funneled to dozens of ventures including now-bankrupt real estate company WeWork and other failed startups such as robot pizza company Zume.
Many in Silicon Valley and on Wall Street have welcomed the nation back into their fold. At this year’s Super Bowl, Mr. Horowitz hosted Mr. al-Rumayyan, according to two people briefed on their activities.
The two men also spent time together before and after the match, the people said, with Mr. Horowitz giving Mr. al-Rumayyan tours of Las Vegas, his adopted city, and introducing the investor to his friends in music and sports.