Saudi Arabia plans to invest $40 billion in artificial intelligence

The Saudi government plans to create a fund of about $40 billion to invest in artificial intelligence, according to three people briefed on the plan — the latest sign of the gold rush toward a technology that has already begun to reshape the way people live and work.

In recent weeks, representatives of the Saudi Public Investment Fund have discussed a potential partnership with Andreessen Horowitz, one of Silicon Valley's leading venture capital firms, and other financiers, the sources said. who were not authorized to speak publicly. They warned that plans could still change.

The planned technology fund would make Saudi Arabia the world's largest investor in artificial intelligence. It would also highlight the oil-rich country's global trade 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 assets of more than $900 billion.

Officials at the Saudi fund discussed the role that Andreessen Horowitz — already an active investor in AI and whose co-founder Ben Horowitz is friends with the fund's governor — could play and how such a fund would work, they said. indicated the sources. The $40 billion target would dwarf the amounts typically raised by U.S. venture capital firms and would be eclipsed only by SoftBank, the Japanese conglomerate that has long been the world's largest investor in start-ups.

The Saudi tech fund, which is being built with the help of Wall Street banks, will be the latest potential entrant into a sector already awash with cash. The global frenzy around artificial intelligence has driven up the private sector valuations and public companies as optimistic investors rush to find or build the next Nvidia or OpenAI. The start-up Anthropic, for example, raised more than $7 billion in just one year – a flood of money virtually unheard of in the world of venture capital.

The cost of financing AI projects is high. Sam Altman, the CEO of OpenAI, reportedly was looking for a huge amount from the UAE government to boost the manufacturing of chips needed for AI technology.

Saudi officials have told potential partners that the country is seeking to support a range of artificial intelligence-related technology start-ups, including expensive and expansive chipmakers and data centers that are increasingly needed to power the next generation of computing, according to four people familiar with the efforts, who were not authorized to speak publicly. He even considered starting his own AI companies.

Two of the people interviewed said the new Saudi investment campaign would likely take off in the second half of 2024. A $40 billion fund could make the Saudi government and Andreessen Horowitz key players in the race to corner various companies linked to the sector.

Mr. Horowitz and Yasir al-Rumayyan, the governor of the Public Investment Fund, discussed the possibility of the Silicon Valley company opening an office in the country's capital, Riyadh, a person familiar with the matter said. conversations.

Other venture capitalists could participate in the kingdom's technology fund, two people briefed on the plans said.

Partly because of its enormous financial clout and growing ambitions, the international business community is closely monitoring the actions of the Public Investment Fund, created in 1971.

In 2018, as Saudi Arabia became a major destination for investment companies and entrepreneurs seeking financial support, the country's agents killed dissident Saudi journalist Jamal Khashoggi at the kingdom's consulate in Istanbul, leading to seemed for a while to damage the country's reputation with international financiers. .

In 2022, the Saudi government invested billions in a company led by Jared Kushner, son-in-law of former President Donald J. Trump, among others, which was seen by many as a political move. One of his recent offerings to merge your LIV Golf The PGA Tour newcomer has angered golfers, but the deal is also controversial in part because of Saudi Arabia's human rights record.

Saudi Arabia, which invested $3.5 billion in Uber in 2016, has largely struggled to invest in technology. He handed $45 billion to SoftBank for the Japanese company's $100 billion Vision fund, which was funneled to dozens of companies, including the now-bankrupt real estate company WeWork and other startups. bankrupt ups, like the robotic pizza manufacturing company Zume.

Many in Silicon Valley and on Wall Street welcomed the nation's return to the fold. At 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 match, the sources said, with Mr. Horowitz showing Mr. al-Rumayyan around Las Vegas, his adopted hometown, and introducing the investor to his musical friends and sportsmen.

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