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Saudi Arabia creating $40 billion AI fund with a16z: report

Mar 20, 2024 - businessinsider.com
The Saudi government is planning a $40 billion AI investment fund, potentially making it one of the largest players in the AI sector. The fund, which could launch in the second half of the year, is part of Saudi Arabia's efforts to diversify its economy beyond oil. The country is in discussions with VC firm Andreessen Horowitz to partner on the fund, which could invest in AI chip makers, data centers, or even launch its own AI startups. The fund would be sourced from the country's Public Investment Fund, which has assets of $900 billion.

However, it's unclear how the US government would react to American startups accepting Saudi funding, given recent crackdowns on Middle Eastern wealth funds due to their ties to China. In a recent instance, the Biden administration forced a venture firm backed by Saudi Arabia's national oil company to unwind its investment in a US-based AI startup. Despite these potential hurdles, the AI market continues to attract significant investment due to the high costs associated with AI development.

Key takeaways:

  • The Saudi government is planning a $40 billion AI investment fund, potentially making it one of the biggest players in the AI sector.
  • The fund would be sourced from the country's Public Investment Fund, which has assets of $900 billion, and Saudi Arabia is in talks with VC firm Andreessen Horowitz to partner on its AI fund.
  • It's unclear how the US government would react to American startups taking Saudi funding, as the US has been cracking down on Middle Eastern wealth funds due to their ties to China.
  • Despite the large investment in AI, tech investments haven't historically been Saudi Arabia's strong suit, with previous bets including a $3.5 billion investment in Uber and a $45 billion contribution to the Softbank Vision Fund.
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