Saudi Arabia is planning to set up a tech fund worth around $40 billion to invest in AI, three sources familiar with the matter said on March 20, as the race to back the transformative technology reshaping how people live and work kicks into a new gear.
Officials from Saudi Arabia's Public Investment Fund (PIF) have held in-depth talks with Silicon Valley venture capital powerhouse Andreessen Horowitz and other financial giants in recent weeks to explore potential partnerships, the sources said. The plans are still at an early stage, however, and could change.
The tech fund would make Saudi Arabia one of the world's biggest AI investors, underscoring the oil-rich nation's ambitions to become a global business hub and diversify its economy away from hydrocarbons. It is pursuing these grand goals through its vast sovereign wealth fund, which has assets of more than $900 billion.
Officials from PIF have discussed potential roles for Andreessen Horowitz and how the fund might operate, the sources said. PIF's mooted $40 billion investment target would dwarf the funds of all but a handful of the biggest U.S. venture capital groups and would rank only behind Japan's SoftBank Group Corp, which has long been the world's most active investor in start-ups.
Backed by deep-pocketed Wall Street banks, the Saudi tech fund would become a new player in an arena flush with cash. A global frenzy for AI has pushed up valuations of both private and public companies as investors scramble to find or create the next Nvidia Corp or OpenAI. Start-up Anthropic, for example, has raised more than $7 billion in just over a year, in one of the fastest fundraisings ever.
The costs of powering AI projects are immense, however. OpenAI's CEO Sam Altman has reportedly sought huge sums of money, including from the United Arab Emirates government, to help pay for the chips needed to advance AI technology.
In talks with potential partners, Saudi officials have made clear that the kingdom is looking to back a range of AI-related tech start-ups, the four sources said. These include chipmakers and operators of the vast and expensive data centers that are increasingly important for powering the next generation of computing. It is even considering setting up its own AI company.
The new Saudi investment vehicle is expected to be launched in the second half of 2024, one of the sources said. The $40 billion fund would establish PIF and Andreessen Horowitz as major players in AI and would make them gatekeepers for deals in the sector.
Separately, PIF's governor Yasir al-Rumayyan has also held talks with Andreessen Horowitz about the possibility of it setting up an office in the Saudi capital Riyadh. Other venture capitalists are also likely to be involved in the Saudi tech fund.
Saudi Arabia has a track record of investing in tech, including a $3.5 billion investment in Uber in 2016 and the $45 billion it gave SoftBank to back its Vision Fund.
