Saudi Arabia plans to invest $40 billion in artificial intelligence

Representatives of the Saudi Arabian Public Investment Fund have discussed the possibility of partnering with Andreessen Horowitz, one of Silicon Valley’s leading venture capital firms, and other financiers in recent weeks, according to the New York Times , who asked not to be identified. They noted that the plans could still change.

Visitors interact with Saudi Arabia's first robot "Sara", at the LEAP conference in Riyadh, February 8, 2023. (Photo: Reuters)

The planned tech fund would make Saudi Arabia the world’s largest investor in AI, reflecting the oil-rich country’s global business ambitions, as well as its efforts to diversify its economy and position itself as a more influential geopolitical player. The country is pursuing those goals through a sovereign wealth fund with more than $900 billion in assets.

Officials at the Saudi Arabian tech fund have discussed the role of Andreessen Horowitz, an investment firm active in the AI sector, and its co-founder Ben Horowitz, on how such a fund would function, the sources said.

The $40 billion figure would far exceed the typical amount raised by US venture capital firms and would rank behind only SoftBank, the Japanese conglomerate that has long been the world's largest startup investor.

The Saudi Arabian tech fund, being built with the help of Wall Street banks, would be a new entrant into a sector already awash with cash.

The global AI craze has pushed up valuations of private and public companies as bullish investors race to find or build the next Nvidia or OpenAI. Startup Anthropic, for example, has raised more than $7 billion in just one year—an unprecedented amount of money in venture capital.

The cost of funding AI projects is huge. Sam Altman, CEO of OpenAI, is reportedly seeking a huge sum of money from the government of the United Arab Emirates (UAE) to boost the production of the chips needed to power AI technology.

Representatives of the Saudi Arabian tech fund have told potential partners that the country is looking to support a range of AI-related tech startups, including chipmakers and the vast data centers that are increasingly needed to power the next generation of computers. They are even considering starting their own AI companies, according to people familiar with the matter.

The new Saudi investment is likely to begin in the second half of 2024, two sources said. The $40 billion fund could make both the Saudi government and Andreessen Horowitz key players in the race to acquire various AI-related businesses.

Meanwhile, another source revealed that Mr. Horowitz and Mr. Yasir al-Rumayyan, governor of the Public Investment Fund, discussed the possibility of Andreessen Horowitz setting up an office in the Saudi capital Riyadh. The two reportedly met before and after the 2024 Super Bowl.

In addition, other venture capitalists can also participate in the Middle Eastern country's technology fund.

Saudi Arabia has previously invested $3.5 billion in Uber, which has struggled to invest in technology, in 2016. It also gave $45 billion to SoftBank to participate in the Japanese company’s $100 billion Vision Fund, which has been allocated to dozens of businesses including the now-bankrupt real estate company WeWork and several other failed startups, such as the robotic pizza maker Zume.

Hoa Vu (Source: NYTIMES)

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