The artificial intelligence darlings of Silicon Valley are starting to get significant backing from Middle Eastern sovereign wealth funds.
Oil-rich countries such as the United Arab Emirates, Kuwait, Qatar, and Saudi Arabia are seeking to diversify their economy and are resorting to digital investments as a precautionary measure. According to statistics from Pitchbook, Middle-Eastern sovereigns have funded five times as many AI startups in the last year.
According to people who spoke with CNBC, investors hoping to acquire a piece of OpenAI's most recent fundraising this week included MGX, a new AI fund based in the United Arab Emirates. OpenAI is expected to be valued $150 billion after the financing.
Few venture firms have the financial resources to match the multibillion-dollar donations from companies like Microsoft and Amazon. However, these sovereign funds have little trouble raising the necessary funding for AI agreements. They make investments on behalf of their governments, which have benefited recently from increased energy costs. Goldman Sachs projects that the combined wealth of the Gulf Cooperation Council, or GCC, nations will increase from $2.7 trillion to $3.5 trillion by 2026.
With almost $925 billion under its belt, the Saudi Public Investment Fund (PIF) has been making massive investments as part of Crown Prince Mohammed bin Salman's "Vision 2030" project. The PIF spends a lot of money on professional football and the LIV golf league in addition to investing in businesses like Uber.
The Abu Dhabi Investment Authority and UAE's Mubadala are managing $1 trillion and $302 billion, respectively. Kuwait's fund has more than $800 billion, while Qatar Investment Authority has $475 billion.
With the goal of raising up to $100 billion for data centres and other infrastructure projects, Abu Dhabi-based MGX joined BlackRock, Microsoft, and Global Infrastructure Partners in cooperation on AI infrastructure earlier this week. With AI company G42 and Abu Dhabi's Mubadala as founding partners, MGX was introduced as a specialist AI fund in March.
A $40 billion cooperation between Saudi Arabia's PIF and American startup capital company Andreessen Horowitz is being discussed. Additionally, it established the Saudi Company for Artificial Intelligence, or SCAI, a specialised AI fund.
(Sources: cnbc.com)
