Saudi Money Fuels the Tech Industry. It’s Time to Ask Why.

The money from regimes that have been criticized for their human rights records — from Saudi Arabia’s government in particular, which has plans to funnel potentially hundreds of billions of dollars into tech companies through its state-controlled Public Investment Fund — stands in stark contrast to those aims. By accepting these investments, tech companies get to revel in the branding glory of global good while taking billions from a government that stands against many of those goals — a government that has an abysmal record with human rights groups, that has systematically marginalized women, that has not had much legal due process and that has advocated an extreme form of Islam that has zero tolerance for just about any religious or intellectual diversity whatsoever.

“Look, every company has a choice about their actions and inactions,” said Freada Kapor Klein, co-chairwoman of the Kapor Center for Social Impact, which advocates for a more diverse and inclusive tech industry.

She said companies could choose not to do business with governments whose actions they found troubling, but many of today’s tech companies have lost a moral compass. “There is an elitism that makes it far too easy for them to rationalize their behavior with their belief that they are the smartest guys — and, yes, it’s always guys — in the room,” she said.

Unsurprisingly, this is not a topic many people want to talk about. SoftBank, the Japanese conglomerate that runs the $100 billion Vision Fund, which is shelling out eye-popping investments in tech companies, declined to comment for this column. Nearly half of the Vision Fund, about $45 billion, comes from the Saudi Public Investment Fund.

WeWork and Slack, two prominent start-ups that have received recent investments from the Vision Fund, also declined to comment. So did Uber, which garnered a $3.5 billion investment from the Public Investment Fund in 2016, and which is in talks to receive a big investment from the SoftBank fund. The Public Investment Fund also did not return a request for comment.

Twitter, which got a $300 million investment from Prince Alwaleed’s Kingdom Holding Company in 2011 — around the same time that it was talking up its role in the Arab Spring — declined to comment on his arrest. Lyft, which received $105 million from Prince Alwaleed in 2015, also declined to comment.

Privately, several founders, investors and others at tech companies who have taken money from the Saudi government or prominent members of the royal family did offer insight into their thinking. Prince Alwaleed, some pointed out, was not aligned with the Saudi government — his arrest by the government underscores this — and he has advocated for some progressive reforms, including giving women the right to drive, a restriction that the kingdom says will be lifted next year.


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The founders and investors also brought up the Saudi government’s supposed push for modernization. The Saudis have outlined a long-term plan, Vision 2030, that calls for a reduction in the state’s dependence on oil and a gradual loosening on economic and social restrictions, including a call for greater numbers of women to enter the work force. The gauzy vision allows tech companies to claim to be part of the solution in Saudi Arabia rather than part the problem: Sure, they are taking money from one of the world’s least transparent and most undemocratic regimes, but it’s the part of the government that wants to do better.

Another mitigating factor, for some, is the sometimes indirect nature of the Saudi investments. When SoftBank’s Vision Fund invests tens of millions or billions into a tech company, it’s true that half of that money is coming from Saudi Arabia. But it’s SoftBank that has control over the course of the investment and communicates with founders. The passive nature of the Saudi investment in SoftBank’s fund thus allows founders to sleep better at night.

On the other hand, it also has a tendency to sweep the Saudi money under the rug. When SoftBank invests in a company, the Saudi connection is not always made clear to employees and customers. You get to enjoy the convenience of your WeWork without having to confront its place in the Saudi government’s portfolio.

Then, finally, there’s the justification of desperation. Some companies don’t have any choice but to take money that’s offered to them. (In 2009, The New York Times Company took a loan from the Mexican billionaire Carlos Slim, who has been criticized for gaining his wealth through close connections with government officials.)

But the tech companies that the Saudis are itching to invest in often do have a choice; they are some of the most highly valued companies of our era, and many of them have no immediate need for more money. For instance: Slack, which raised $250 million from SoftBank last month, said it had no plans for spending the money and instead had raised it to preserve long-term “operational flexibility.”

But why take it from the Saudis? I suspect it’s the most obvious reason: because the money is there, and no one is making too big a fuss about it.

It used to be that most of the money in tech came from more vaunted sources — universities, philanthropies, pension plans and other nonprofits, which made up the bulk of funders to legendary venture capital firms like Sequoia Capital and Kleiner Perkins Caufield Byers.

Now we’re in a new era, when massive pools of money splash through sleek-sounding Vision Funds and come out seeming squeaky clean — and ready to fund the next great thing to make the world so much better, we promise.

Email:; Twitter: @fmanjoo

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