In Silicon Valley, Saudi Money Keeps Flowing to Startups Amid Backlash

Saudi Arabia, which continues to drive its wealth away from the declining oil reserves, directs its money to sectors and Western companies that are moving in favor of technology.

Assassination of political dissidents. Terrorism financing. Civil air attacks. Torture. Pressure on women and religious minorities. Saudi Arabia’s human rights record is among the worst in the world.

For Saudi Arabia, which has been a major ally of the United States and has invested heavily in US companies in recent years, is at a point of change because of its ambition to be a stable source of oil and to restrain Iran.

The Washington Post columnist Cemal Kaşıkçı’s reaction to the murder of a Saudi consulate in Istanbul in recent months has dropped from the world and many countries, especially the US, have taken a stand against Saudi Arabia.

The two countries had a comfortable relationship before this incident. Saudi Arabia was the first foreign country that US President Donald Trump visited as president. On the other hand, Trump’s son-in-law, Jared Kushner, had a close relationship with Prince Mohammed bin Salman, who has been the leader of the country’s absolute monarchy since 2017. Last year, Trump even said in a speech to Arab leaders in Saudi Arabia’s Riyadh capital that he was not interested in putting pressure on human rights.

However, this weather was reversed after the murder of Kaşıkçı.

Republican senator Lindsey Graham said that he can not do business with Saudi Arabia as long as Bin Salman remains in office . The country’s boycott has spread to business leaders, especially in Silicon Valley. Other notable names such as Uber CEO Dara Khosrowshahi and JPMorgan Chase, Ford and executives at Google have left the country’s annual ve Davos in the Desert ara event in October.

So, is this boycott going to US entrepreneurs who get Saudi money? It probably won’t be easy. The effect of the Kingdom is spreading more and more every year. Saudi money is the source of the US’s biggest technology companies such as Magic Leap, Lyft and Uber.

Saudi Arabia ‘s largest venture fund of all time , SoftBank’s massive $ 45 billion investment in the Vision Fund, shows that the Saudi currency is likely to be part of the largest venture capital pool in the years to come. The Vision Fund has made at least 26 investments so far, including WeWork, GM Cruise, Slack and other initiatives.

How Much Saudine Investors in Silicon Valley?

Too much. Millions of dollars. In the last five years, the analytical platform, Quid, estimates that Saudi investors are directly involved in investment tours of at least $ 6.2 billion. As the investment tours are not publicly available, it is not known exactly how much of these money comes directly from Saudi investors.

While Saudi Arabia continues to move its wealth away from the declining oil reserves, it is rapidly turning its petro-dollars from oil into Western companies.

These direct investments make Saudi Arabia one of the world’s largest limited partners. For example, in the last three years , Softbank has invested $ 45 billion in Saudi Arabia and has become one of the world’s largest financial players.

Who is Investing?

Saudi Arabia has a lot of global funds. One of the largest is the Saudi Public Investment Fund , whose value is now $ 100 billion, and is aimed at $ 2 trillion by 2030 .

According to Quid and Pitchbook, funds that invest in US companies between 2008 and 2017 are listed in the table. Investments in the table do not cover the enormous money pools in the Saudi royal family, and family members invest in companies through personal channels.

Which areas do they invest in?

According to Quid data, the Saudis, except industrial manufacturing since 2008; augmented reality, vehicle calling platform, social networks, etc. While the country’s state-owned oil company, ARAMCO, is turning to industrialization, more recent funds, such as the Saudi Public Investment Fund, focus on technology.

The sectors where the Saudis transferred their money and the number of US companies that they invested in these sectors are as follows:

  • Industrial production (8 companies)
  • Virtual reality and machine learning (6 companies)
  • Chemicals and materials (6 companies)
  • Aviation (3 companies)
  • Vehicle calling platform (2 companies)

In addition, top-level investment tours with Saudi participation are listed in the table below.

 

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