Riyadh, Saudi Arabia — October 28, 2024 — As the latest indication of the rush toward a technology that has already started to change how people live and work, the Saudi Arabian government intends to establish a fund of roughly $40 billion to invest in artificial intelligence, according to three people briefed on the plans.
Saudi Arabia has made the audacious decision to invest $40 billion in artificial intelligence (AI) over the next ten years in an effort to strengthen its position as a global leader in technology. Enhancing the Kingdom’s digital infrastructure and diversifying its economy away from reliance on oil are the goals of this strategic plan.
During a tech symposium in Riyadh, Crown Prince Mohammed bin Salman announced the investment and highlighted how AI has the potential to revolutionize several industries, including healthcare, education, and energy. “This investment represents our commitment to fostering innovation and establishing Saudi Arabia as a hub for technology and research,” he said.
According to the persons, who were not allowed to speak publicly, representatives of Saudi Arabia’s Public Investment Fund have talked about a possible collaboration with Andreessen Horowitz, one of Silicon Valley’s leading venture capital firms, and other financiers in recent weeks. They issued a warning that the plans might still be altered.
Saudi Arabia would become the greatest artificial intelligence investor in the world thanks to the proposed tech fund. Additionally, it would highlight the oil-rich country’s aspirations for international trade, economic diversification, and increased geopolitical influence. With more than $900 billion in assets, the Middle Eastern country is working toward those objectives through its sovereign wealth fund.
Saudi fund officials have spoken about how such a fund might operate and the role Andreessen Horowitz, who is already an active investor in A.I. and whose co-founder Ben Horowitz is friends with the fund’s governor, could play, according to the people. SoftBank, the Japanese company that has long been the top investor in start-ups worldwide, would surpass the $40 billion target, which would be far larger than the usual sums raised by U.S. venture capital firms.
Funding will be used to build research facilities, cultivate local AI talent, and collaborate with top international tech companies. Additionally, by fostering an environment that promotes innovation and technological progress, the program seeks to assist AI startups and entrepreneurs.
Experts predict that this investment will improve public services, boost economic growth, and raise Saudi people’s standard of living. The government intends to start several pilot projects, concentrating on AI-powered educational platforms, automated healthcare systems, and smart cities.
Wall Street banks are assisting in the creation of the Saudi tech fund, which will be the newest possible player in a lucrative industry. As optimistic investors scramble to discover or create the next Nvidia or OpenAI, the global craze for AI has driven up the valuations of both private and public enterprises. For example, the start-up Anthropic raised almost $7 billion in just one year, which is a huge amount of money that is almost unheard of in the venture capital industry.
Funding AI projects comes at a high cost. According to reports, OpenAI CEO Sam Altman has asked the government of the United Arab Emirates for a sizable sum to increase production of the chips that drive artificial intelligence.
According to four people with knowledge of those efforts who were not authorized to speak publicly, Saudi officials have told prospective partners that the kingdom is looking to support a variety of tech start-ups related to artificial intelligence, including chip manufacturers and the costly, large data centers that are becoming more and more necessary to power the next generation of computing. It has even contemplated launching its artificial intelligence businesses.
According to the sources, the second half of 2024 is probably when Saudi Arabia’s new investment push will start to gain traction. With a $40 billion fund, the Saudi government and Andreessen Horowitz might become major actors in the competition to control other companies in the industry.
According to sources familiar with the discussions, Mr. Horowitz and Yasir al-Rumayyan, the governor of the Public Investment Fund, have talked about the potential for the Silicon Valley company to open an office in Riyadh, the nation’s capital.
According to sources with knowledge of the discussions, Mr. Horowitz and Yasir al-Rumayyan, the governor of the Public Investment Fund, have talked about the potential for the Silicon Valley company to open an office in Riyadh, the nation’s capital.
According to two persons who were briefed on the plans, additional venture capitalists might join the kingdom’s tech fund.
The Public Investment Fund was established in 1971 and is closely watched by individuals in worldwide business circles, in part due to its vast financial clout and expanding goals.
When Saudi Arabia’s agents killed dissident journalist Jamal Khashoggi in the kingdom’s Istanbul consulate in 2018, the country’s reputation among foreign financiers appeared to suffer for a while. This was just as Saudi Arabia was emerging as a major destination for investment firms and entrepreneurs looking for financial backing.
Many viewed the Saudi government’s 2022 billion-dollar investment in a company led by Jared Kushner, the son-in-law of former President Donald J. Trump, as a political ploy. Golfers were incensed by one of its recent agreements to combine its LIV Golf startup with the PGA Tour, but the agreement is also contentious due in part to Saudi Arabia’s human rights record.
Saudi Arabia has generally had trouble investing in technology, even though it invested $3.5 billion in Uber in 2016. It gave SoftBank $45 billion for the Japanese company’s $100 billion Vision fund, which was invested in dozens of businesses, including the now-defunct real estate company WeWork and other unsuccessful start-ups, like Zume, a startup that makes robotic pizza.
The country has been embraced by many on Wall Street and in Silicon Valley. According to two individuals briefed on their actions, Mr. Horowitz hosted Mr. al-Rumayyan during this year’s Super Bowl.
In Conclusion
The Vision 2030 framework of Saudi Arabia seeks to encourage sustainable growth and diversify the economy. To establish itself as a leader in the technology revolution, the nation is making calculated investments in artificial intelligence. According to industry analysts, this action will create a knowledge-based economy by luring talent and foreign investment. Saudi Arabia will be able to lead the world in AI developments and influence future innovation and economic resiliency thanks to this ambitious initiative.
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