The country in the Middle East is raising massive funds to spend on artificial intelligence (AI). It could become the biggest player in this particular competitive market. According to a report by three individuals with information about the matter, the Saudi Arabian government intends to establish a $40 billion investment fund in artificial intelligence. It is the most recent indication of the rush to acquire a technological advancement that has already started to revolutionize various aspects of human existence and labor.
According to unidentified sources, Saudi Arabia’s Public Investment Fund representatives have been talking about a possible collaboration with Andreessen Horowitz, a leading venture capitalist firm in Silicon Valley, and other investors in the last few weeks. They indicated that changes were still possible with the plans.
The proposed technology fund would put Saudi Arabia as the leading global financier in the field of artificial intelligence. It would also highlight the oil-rich nation’s initiatives to expand its financial markets and become a more powerful participant in geopolitics, besides its international economic objectives. The Middle Eastern country is following these objectives via its national wealth fund, which exists with over $900 billion in holdings.
Reportedly, Saudi fund representatives have deliberated on the potential involvement of Andreessen Horowitz, whose founding member, Ben Horowitz, maintains a personal relationship with the fund’s governor, and the operational mechanisms of this sort of fund.
The $40 billion objective would be significantly larger than the average funds raised by venture capital firms in the United States, beating only SoftBank, the Japanese corporation that has historically been the most significant shareholder in startups worldwide.
The Saudi technology fund, which Wall Street firms are assisting in the formation of, will be the most recent prospective participant in an industry already flooded with capital. Private and public company valuations are rising in response to the worldwide excitement surrounding artificial intelligence as optimistic investors rush to determine or establish a successor to Nvidia or OpenAI. For example, in a single year, the startup Anthropic (startup) raised over $7 billion — an amount of capital that is practically never seen in the world of investment in startups.
Financing projects involving artificial intelligence comes at a heavy cost. According to reports, OpenAI CEO Sam Altman has asked the government of the United Arab Emirates for a significant amount of money to increase chip manufacturing, which is necessary for powering artificial intelligence (AI) technology.
Four people with knowledge of those efforts, who were not authorized to speak publicly, said that Saudi representatives had told prospective partners that the kingdom is looking to support a variety of tech startups related to artificial intelligence, including chip makers and the costly, wide data centres that will become becoming increasingly important to power the next generation of computing. It is thinking of launching its artificial intelligence businesses.
According to two sources, Saudi Arabia’s new financial effort is anticipated to speed up in the latter part of 2024. The potential forty billion-dollar fund could position the Saudi Arabian government and Andreessen Horowitz as major competitors in the competition to acquire numerous industry-related enterprises.
As reported by an individual with information on the arguments, Mr Horowitz and the administrator of the Fund for Public Investment, Yasir al-Rumayyan, discussed options for the potential establishment of an office by the Silicon Valley company in Riyadh, the capital of Saudi Arabia.
Other investors in venture capital might join the kingdom’s technology fund, according to two individuals with information on the plans.
Global economic sectors closely observe the Public Investment Fund’s (PIF) actions, in part due to the organization’s expanding objectives and considerable financial influence. The PIF was established in 1971.
In 2018, as Saudi Arabia was emerging as a prominent hub for investment firms and entrepreneurs in search of financial support, the brutal murder of dissident Saudi journalist Jamal Khashoggi by Saudi intelligence agents in the embassy in Istanbul seemed to harm the country’s reputation among global investors temporarily.
In 2022, the Saudi government invested billions of dollars in a company owned by Jared Kushner, who is married to the daughter of former President Donald J. Trump. This was considered by several to be a political act. Many people are against one of the country’s most recent agreements to join its new LIV Golf tour with the PGA Tour. It is primarily because of Saudi Arabia’s history of human rights violations.
Saudi Arabia has had a hard time spending on technology in general, even though it invested a total of 3.5 billion dollars in Uber in 2016. It also gave SoftBank $45 billion for the Japanese company’s 100 billion-dollar Goals capital. This fund was invested in dozens of businesses, including the now-bankrupt real estate company WeWork and other unsuccessful entrepreneurs, like Zume, which made pizza-making robots.
A lot of people in Silicon Valley and Wall Street are glad that the country is back. Two people who know what is happening say that Mr. Horowitz hosted Mr. al-Rumayyan during this year’s Superbowl Championship.
The individuals who knew both men said that they had conversations together prior to and following the game. Mr. Horowitz showed Mr. al-Rumayyan around Las Vegas, which is his specified city, and put him in communication with his music and sports friends.
