Saudi Wealth Firm, Andreessen Eye Up to $40 Billion for AI Fund

Dinesh Nair and Matthew Martin, Bloomberg News

(Bloomberg) -- Saudi Arabia’s Public Investment Fund is in early talks to partner with venture capital giant Andreessen Horowitz on a fund, which may grow to as large as $40 billion in commitments, to target artificial intelligence investments, according to people familiar with the matter.

The PIF aims to initially run the new fund and will be among investors contributing to it, the people said, asking not to be identified discussing private information. Participants may only be asked to put in cash after specific deals are identified, the people said.

No final decisions have been made and the kingdom may eventually decide against setting up such a fund, they said. Representatives for the PIF and Andreessen Horowitz declined to comment. The New York Times first reported on the AI initiative on Tuesday.

The PIF is the main entity driving Saudi Arabia’s Vision 2030 program — Crown Prince Mohammed bin Salman’s multi-trillion-dollar economic transformation project — and is trying to line up funding for its various spending commitments. Saudi Arabia is one of a clutch of oil-rich Persian Gulf states plowing money into AI as part of efforts to diversify their economies.

Silicon Valley’s Andreessen Horowitz, which has long-standing ties with the kingdom, has also been on the hunt to raise billions of dollars from investors for a new collection of funds, including two focused on AI, Bloomberg has reported.

The PIF is already backing a new investment firm with $100 billion in capital that will plow money into a range of industries, including semiconductors and tech. Saudi Arabia previously made massive capital deployments into the technology industry, including SoftBank Group Corp.’s Vision Fund.

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Neighboring Abu Dhabi is setting up its own technology investment firm, called MGX, targeting deals in AI and semiconductors. That one aims to top $100 billion in assets under management in a few years, people familiar with the matter have said.

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Still, Abu Dhabi’s ties to China have raised concerns among US officials. That’s prompted Emirati AI company G42 — which has been at the forefront of UAE efforts to develop the technology and is a founding partner of MGX — to pare back its presence in Beijing, and the firm has now pledged to invest in Western markets where its key AI partners operate.

The new Saudi fund will likely be faced with similar issues, and is seeking to invest in a partnership with a US fund to avoid that level of scrutiny, one of the people said.

--With assistance from Mark Bergen.