It was in late March that Silicon Valley decided that it’s no longer shameful to accept massive investment dollars from Saudi Arabia.

“The more I think about it, the more Saudi almost feels like a startup,” Adam Neumann, the WeWork founder, told the audience of the Miami conference hosted by the kingdom.

Venture capitalists Ben Horowitz and Marc Andreessen were pumped up, too.

“Saudi has a founder. You don’t call him a founder, you call him, ‘His Royal Highness,’ but he’s creating a new culture, he’s creating a new vision for the country, he’s got a very exciting plan to execute, and the people in the country are fired up to do it,” said Horowitz.

The whole scene at the Miami event, which was hosted by an offshoot of Saudi’s sovereign wealth fund, would have been unimaginable four and a half years ago.

In October 2018, Prince Mohammed bin Salman bin Abdulaziz al-Saud, or MBS as he’s often called, was determined by the CIA to have ordered the killing of journalist Jamal Khashoggi. Though Saudi Arabia had been a financial supporter of Silicon Valley, the killing led some American investors to speak out against MBS. That month, bold-faced names canceled their attendance at Davos in the Desert, a giant event in Riyadh hosted by the Future Investment Initiative Institute, a nonprofit linked to the Public Investment Fund, the sovereign wealth fund of Saudi Arabia and the sponsor of the Miami conference.

But five years later, the Future Investment Initiative Institute, which is essentially MBS’s private think tank, is hosting investors, CEOs, and former government officials at events in Saudi Arabia and the United States. The latest one in Miami featured guests like Jared Kushner, Steve Mnuchin, and Semafor cofounder Justin Smith, alongside the mayor of Miami. The event even drew out some celebrities, including DJ Khaled and A-Rod, and is scheduled to return to Florida next year.

A few days after the Miami event, Saudi Arabia published the names of dozens of venture capital firms, buyout funds, real estate investors, and startups that it’s funding in the US and internationally. The Public Investment Fund’s venture arm, Sanabil, is putting $2 billion a year into products we consume and tech we benefit from. It has direct investments in Bird scooters and AI startups Vectra and Atomwise. Plus there’s indirect money going through other venture funds into companies including Credit Karma, GitLab, Reddit, and Postmates, as well as the popular running shoes brand On or the military-tech darling and Pentagon contractor Anduril.

Among the previously undisclosed firms that had received Saudi funds: Andreessen Horowitz, whose portfolio companies include Instacart and SpaceX.

Two weeks later, Sanabil added major investors Tiger Global and Peter Thiel’s Founders Fund to its list of investments. Investment powerhouse Sequoia also was added to that list and then a week later was removed, with Sequoia China, a separate legal entity, taking its place.

“I was really surprised to see it. I think it’s disappointing,” said one influential Silicon Valley CEO, who asked to remain anonymous so as not to rankle colleagues. “I think, going forward, founders should ask for an answer. Most founders that I know have said things like, ‘I didn’t even think to ask because it seemed unimaginable to me.’”

But American venture capitalists might not care as much about optics these days. Capital markets are tightening in the US and Europe, which means there’s less money to go around in general. Meanwhile, the Biden administration is softening its stance on Saudi Arabia and even partnering with the kingdom on the Middle East broadly as well as energy policy and economic initiatives. There’s also a sense of urgency as China’s prowess as a tech competitor heightens. The convergence of these factors means that many new companies and established investing groups have turned to Saudi Arabia.

Vox reached out to the 60 venture capital and buyout firms and 19 startups that Sanabil has said it’s invested in to ask a simple question: How does this investment align with your company or firm’s values? None of them wanted to provide a comment.

Saudi money has become so prevalent in Silicon Valley. Why does everyone seem to think that’s okay? And why do they not want to talk about it?

How Saudi Arabia became a startup country

Back before 2018, it seemed like everyone in Silicon Valley was taking Saudi investments.

Though the kingdom was long understood as authoritarian, Silicon Valley was excited about the prospect of the young deputy crown prince known as MBS. He offered a reforming vision that New York Times columnist Tom Friedman touted as “more McKinsey than Wahhabi,” and called “his passion for reform authentic.”

MBS’s hyped-up reputation earned him a rousing welcome to the West Coast in June 2016 and April 2018. That included face time with Jeff Bezos, Bill Gates, and Mark Zuckerberg as well as exclusive visits to the headquarters of Apple and Google.

 Bandar Algaloud/Saudi Kingdom Council/Anadolu Agency/Getty Images

During those two years, MBS poured at least $11 billion into US startups, making it the industry’s largest single investor. Uber received $3.5 billion from Saudi Arabia’s Public Investment Fund in 2016, after board member and former Obama adviser David Plouffe traveled to the kingdom. Electric car company Lucid received $1 billion and Magic Leap, the VR headset company, got $461 million through the fund.

Dozens of others received massive dollars through the SoftBank Vision Fund, which was funded through about $45 billion from Saudi’s Public Investment Fund. SoftBank is a Japanese telecom giant and multinational conglomerate that gave capital lifelines to startups like DoorDash, Slack, and WeWork. Through the first Vision Fund, Neumann’s WeWork received $4.4 billion, DoorDash got $680 million, and Slack benefited from a $250 million funding round led by the fund. Even Wag, the dog-walking app, got $300 million. The Wall Street Journal called the scale of investments “unprecedented.”

While people in tech may have taken stances against Saudi behavior, they weren’t exactly declining money from the Vision Fund, according to Margaret O’Mara, a historian of Silicon Valley at the University of Washington.

“If anyone was making those public statements, they did them quietly enough that they weren’t noticed by me,” she said.

Around that time, MBS had announced his intent to build a futuristic Saudi desert enclave called Neom. It would be a place for the young royal to show off his extravagant wealth through cutting-edge technologies and ostensibly sustainable design at a grand scale, thanks to $500 billion from the Public Investment Fund. Now under construction, the urban experiment includes a 110-mile-long city of skyscrapers called the Line, ski resorts and tourist beaches, and “climate-proof agriculture,” among other extravagant gimmicks, designed by starchitects. It’s all come under criticism for evicting indigenous residents, being wasteful to construct, and for containing potentially dystopian elements of a surveillance state built into Neom’s “smart city” infrastructure.

In September 2018, Open AI co-chair Sam Altman, Marc Andreessen, Apple designer Jony Ive, and former Uber CEO Travis Kalanick all joined Neom’s board.

The Khashoggi killing happened the following month, and much of Silicon Valley publicly stepped back from MBS. Altman publicly resigned from the board, and Ive’s name disappeared from it. Stars from Google and Uber dropped out of the October 2018 Davos in the Desert conference. The investors who did attend shielded their name tags from the press in attendance to avoid the embarrassment of supporting a ruler accused of ordering a brutal murder, though over time influential business people started to trickle back.

Since 2019, Saudi investors have participated in US deals worth a total of $7.4 billion, according to data from PitchBook. And while investment is slowing across the board, any money coming in is valuable.

How startups got comfortable with Saudi investments again

A combination of factors has brought Saudi Arabia back into the fold.

Candidate Biden on the campaign trail pledged to make MBS a pariah, but as high oil prices tested his global policies, the president traveled to Riyadh and gave the prince a first-bump in July 2022. It was an embarrassing about-face that showed that it was okay to do business with the country. So if President Biden can’t quit Saudi Arabia, why would Silicon Valley?

For all of the criticism coming from Congress and corners of the Biden administration about Saudi human rights, the US has largely continued to approve major sales of military technologies and weapons to Saudi Arabia. This American policy decision has given companies top cover and permission to follow.

“It’s a sensitive subject,” Jonathan Lacoste, the founder of Space.VC, said by text. “I’ve heard several VCs say that taking capital from any US ally or partner should be acceptable. … I’ve also seen VCs acknowledging it’s not worth the risk.”

Given the vicious policies that MBS has pursued, including domestic crackdowns and a disastrous war in Yemen, there are real perils.

“American businesspeople: Tread carefully. This is a country that does not respect human rights or the rule of law. And if you get involved, you have to be mindful of who your partner is,” says Michael Posner, a professor at NYU Stern School of Business, who previously served as Obama’s top human rights leader in the State Department. “It is a repressive government that stifles dissent, that arrests its critics, that doesn’t value free expression. The list goes on and on.”

 Tasneem Alsultan/Bloomberg via Getty Images

Meanwhile, the credit crunch and lack of liquidity in markets in the US and Europe have made investments from Saudi Arabia welcome. “The firehose of money that came into tech over the last decade is now being tightened quite a lot,” says O’Mara. So, many large venture firms, with hyper-scaled assets under management and international aspirations, have turned to the Middle East sovereign funds for the sometimes hundreds of millions of dollars they need to fund per cycle.

The structure of such investing, wherein venture firms in practice don’t disclose their limited partners — that is, where the money comes from — gives firms like Andreessen Horowitz, 500 Global, and General Atlantic some plausible deniability, or at least distance from, their Saudi sovereign wealth investments. And that gives their portfolio companies even further distance and offers up the possibility that the startup founder can simply stay in the dark about where the money comes from.

Another important factor is that China is investing heavily in advanced technologies, and in response, Washington has centered much of its hawkish rhetoric on countering China’s influence worldwide. Silicon Valley is starting to view China through such a lens, too. Some US investors, who are committed to backing startups that would ultimately bolster US national security and qualitative edge, say that Saudi Arabia is the lesser of two evils at a moment when they see the China threat as particularly acute.

“There are times in history when we have the luxury to moralize and stand up for certain values, and there are times when you don’t have that luxury and you have to make compromises,” says Jake Chapman, managing director of the Army Venture Capital Corporation. In fact, a number of US military organizations and intelligence agencies have launched their own investment arms.

In an indication of how comfortable Saudi Arabia has become for investors, Goldman Sachs president of global affairs Jared Cohen visited the kingdom in February. Saudi Arabia is “in control of their own geopolitical destiny,” he posted on Linkedin. It was a not-so-subtle way to praise the kingdom and, in effect, MBS’s stewardship without using the crown prince’s name.

The art, film, and media industries have also followed this trend line on Saudi Arabia. The money is so ubiquitous that even Vox is touched by it. Penske Media Corporation received in 2018 a $200 million investment from the Saudi Research and Media Group, which is closely linked to MBS. Penske became a minority shareholder in Vox Media, this site’s parent company, earlier this year.

The vast distribution of Saudi money reaches some unlikely investors. Sanabil, the Public Investment Fund’s venture arm, released such a long list of investees on its website in April, and has continued to add several more news-making firms there, that that it was difficult to conceptualize the scope. Iconiq, the family office for many ultra-rich tech people, including Mark Zuckerberg, Sheryl Sandberg, and Jack Dorsey, was also on the list. So was the Peter Thiel-backed Valar capital investing group and Silverlake, a private equity firm whose portfolio of companies includes name brands Airbnb, Dell, and Waymo.

 Royal Court of Saudi Arabia/Anadolu Agency via Getty Images

It gets even more complicated. The fact that Khashoggi was a Washington Post columnist has led to a standoff between MBS and the owner of the paper, Jeff Bezos, whose phone was reportedly hacked by the Saudi crown prince. Yet an early-stage venture firm that Bezos backs, Village Global, is one of the recently revealed recipients of Saudi venture dollars.

“There’s no way you could found a startup in this VC community and not be beholden to MBS or someone one step away from him,” said another tech CEO, who asked to stay anonymous to maintain ongoing relationships.

The moral hazards of Saudi Arabia’s investments endure

The Future Investment Initiative Institute held another gathering at the Pierre Hotel overlooking Central Park Manhattan last fall, where networking investors and NGO-types buzzed past the colorful murals of the Rotunda Room. Teams of comms specialists choreographed TED-inspired panels being live-streamed, quickly packaging them into memes and highlight reels, and Jared Kushner strode by with an entourage.

As waiters in white dinner jackets served freshly sautéed salmon and pasta, the international cadre of attendees were blunt about their host: Saudi Arabia is where the money is.

Though Silicon Valley once wrestled with the moral implications of Saudi dollars after the killing of Khashoggi, tech investors have clearly moved on. Horowitz, for instance, has been taking founders from its portfolio companies back and forth to what Horowitz described as a “startup country.” And some worry that the potential investments that might emerge from nurturing relationships through trips like these could help erase the stigma of the journalist’s murder.

Expect more visits. At the Miami forum, the Public Investment Fund’s governor said it’s likely to grow from $650 billion today to $1 trillion by 2025 and up to $3 trillion by 2030. With lending severely tightened in US and European banking systems, the financial and investing outlook for American VCs is distressing.

 Stefan Wermuth/Bloomberg via Getty Images

The return of US startups courting Saudi money also reinforces a certain narrative that MBS has created for himself — that he’s a reformer. The crown prince likes to highlight the splashy implementation of policy changes such as allowing women to drive, the opening of cultural spaces like movie theaters, and hosting major sporting events.

But, far beyond the killing of Khashoggi, the human rights situation in Saudi Arabia is abysmal. Executions have doubled under MBS, and many political prisoners remain incarcerated without due process.

Though Saudi Arabia has not been able to re-attract star power to the Riyadh summit that appeared in 2017, the year before Khashoggi’s killing, that may be beginning to change. MBS seems to know it’s better to stay on the sidelines, and the crown prince is so influential that he doesn’t need to be in the spotlight. It’s more effective to have Ben Horowitz and Adam Neumann praise his vision for Saudi Arabia.

Neumann might even expand his new real-estate startup, Flow, into the Neom urban experiment. As he put it in Miami, “It’s leaders like His Royal Highness that are actually going to lead us where we want to go.”

Rani Molla contributed reporting.

https://www.vox.com/technology/2023/5/1/23702451/silicon-valley-saudi-money-khashoggi