Saudi Arabia to set up mammoth $40 billion fund to invest in AI start-ups

Saudi Arabia is in discussions to establish a substantial $40 billion fund aimed at investing in artificial intelligence, as the nation endeavors to make its mark in an industry already flush with capital and strengthen its foothold in high-tech sectors.

The country’s Public Investment Fund (PIF), boasting assets estimated at $925 billion, is reportedly in negotiations with Silicon Valley’s Andreessen Horowitz regarding this initiative. According to reports from The New York Times, this fund could be operational by the end of 2024, significantly surpassing existing investments in the market.

This substantial investment pool could be allocated towards various areas, including artificial intelligence, microchip manufacturing, and advanced data storage technologies. Moreover, there are prospects for Andreessen Horowitz to establish a presence in Riyadh, alongside the potential emergence of indigenous AI startups within the kingdom.

The co-founder of Andreessen Horowitz, Ben Horowitz, is reportedly in discussions with PIF governor Yasir al-Rumayyan about establishing this AI investment initiative, which could position both the Saudi government and Andreessen Horowitz as influential figures in the burgeoning AI market.

Experts emphasize the transformative potential of AI across industries, although concerns about its ethical implications, such as misuse by authoritarian regimes and potential job displacement, have been raised.

Under the leadership of Crown Prince Mohammed bin Salman, Saudi Arabia aims to position itself as a regional leader in high-tech industries, driven by initiatives like NEOM, a planned megacity project aimed at fostering innovation and sustainability.

Despite skepticism surrounding NEOM’s feasibility, its success hinges on significant growth in the kingdom’s high-tech sector and substantial domestic and international investments.

Saudi Arabia’s efforts to attract regional investors to Riyadh, backed by high-tech infrastructure development, are part of its broader strategy to diversify its economy away from oil dependency. However, the AI industry’s significant financial requirements, as exemplified by initiatives like OpenAI’s $7 trillion funding target, highlight the challenges ahead.