Saudi Arabia’s government plans to create a fund of about $40 billion to invest in artificial intelligence, according to three people briefed on the plans — the latest sign of a gold rush toward a technology that has already begun to reshape lifestyles and people’s 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 funders, said the people, who were not authorized to speak publicly. They warned that plans could still change.
The planned technology fund will make Saudi Arabia the world’s largest investor in artificial intelligence. It will also showcase the oil-rich nation’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 Eastern nation pursues these goals through its sovereign wealth fund, which has more than $900 billion in assets.
Officials from the Saudi fund have discussed the role that Andreessen Horowitz — already an active investor in artificial intelligence and Ben Horowitz’s co-founder and fund manager — could play and how such a fund would operate, the people said. The $40 billion target would fall short of the typical sums raised by US venture capital firms and dwarfed only by SoftBank, the Japanese conglomerate that has long been the world’s biggest investor in startups.
The Saudi tech fund, which is being raised with the help of Wall Street banks, would be the latest potential entrant in a sector already awash with cash. The global frenzy surrounding artificial intelligence has pushed up private and public company valuations as bullish investors scramble to find or build the next Nvidia or OpenAI. Startup Anthropic, for example, raised more than $7 billion in just one year—a flood of money almost unheard of in the venture capital world.
The cost of funding AI projects is high. Sam Altman, the CEO of OpenAI, has reportedly requested a huge sum from the United Arab Emirates government to boost the manufacturing of chips needed to power AI technology.
Saudi officials have told potential partners that the country is looking to support a range of AI-related tech startups, including chipmakers and the expensive, sprawling data centers increasingly needed to power the next generation of computers. , according to four people with knowledge of those efforts, who were not authorized to speak publicly. She has even considered starting her own AI companies.
Saudi Arabia’s new investment push is likely to take off in the second half of 2024, two of the people said. A $40 billion fund could make both the Saudi government and Andreessen Horowitz key players in races to take part in various businesses related to the sector.
Mr. Horowitz and Yasir al-Rumayyan, the head of the Public Investment Fund, 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 may participate in the kingdom’s technology fund, two people briefed on the plans said.
Partly because of its enormous financial influence and growing ambitions, those in international business circles closely monitor the movements of the Public Investment Fund, which was created in 1971.
In 2018, just as Saudi Arabia was becoming a major destination for investment firms and entrepreneurs seeking financial backing, the country’s agents killed dissident Saudi journalist Jamal Khashoggi at the kingdom’s consulate in Istanbul, which for a spell seemed to tarnish the reputation. of the nation among international financiers. .
In 2022, the government of Saudi Arabia invested billions in a company run by the son-in-law of former President Donald J. Trump, Jared Kushner, among others, which was seen by many as a political move. One of its recent deals to merge LIV Golf with the PGA Tour drew the ire of players, but the deal is also controversial in part because of Saudi Arabia’s human rights record.
Saudi Arabia, which pumped $3.5 billion into Uber in 2016, has largely struggled with technology investment. He handed over $45 billion to SoftBank for the Japanese company’s $100 billion Vision fund, which has been funneled into dozens of businesses, including now-bankrupt real estate firm WeWork and other failed startups such as robotic pizza maker Zume.
Many in Silicon Valley and Wall Street welcomed the nation back into the fold. During 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 game, the people said, with Mr. Horowitz giving Mr. al-Rumayyan tours in Las Vegas, his adopted hometown, and introducing the investor to his music friends. and sports.
