AI Startups Find Financing Pipeline in Middle Eastern Sovereign Wealth Funds

Sovereign wealth funds have reportedly become major players in the artificial intelligence (AI) funding race.

Countries such as Saudi Arabia, Kuwait and the United Arab Emirates (UAE) are turning to AI projects as a way to diversify their economies, CNBC reported Sunday (Sept. 22).

In the last year, funding for AI firms from these oil-rich nations’ wealth funds have grown fivefold, the report added, citing Pitchbook data.

MGX, an AI fund from the UAE, is among the investors looking to take part in OpenAI’s latest fundraising effort, which is believed to value the company at $150 billion, sources told CNBC.

As the report noted, most venture capital (VC) funds can’t afford to compete with tech giants such as Amazon and Microsoft when it comes to funding AI projects.

Sovereign wealth funds, however, have no such trouble, as their governments are flush with cash thanks to rising energy prices. The total wealth of the Gulf Cooperation Council countries’ is expected to reach $3.5 trillion by 2026, CNBC said, citing data from Goldman Sachs.

Meanwhile, another UAE firm, Mubadala, has also invested in OpenAI rival Anthropic, and is one of the most active venture investors, with eight AI deals in the past four years, the report said. Sources told CNBC Anthropic said it would not take money from the Saudis in its last funding round, citing national security concerns.

PYMNTS examined AI’s potential to transform the Middle East in a report earlier this year.

“Successful AI development efforts could not only lead to a wave of local creativity and innovation such as new startups, and attracting generation of students to the field, but could spread the resulting prosperity across the region, countering local disbalances and democratizing the knowledge economy to attract the brightest minds,” geopolitical analyst Irina Tsukerman said in an interview for that report.

And efforts like Saudi Arabia’s Public Investment Fund, boasting over $900 billion in assets, is working to establish itself as a global AI leader, Bas Kooijman, CEO and asset manager at DHF Capital, told PYMNTS in an interview.

“The fund could spur innovation, attract global tech partnerships, and accelerate AI adoption across various industries within the region, contributing significantly to Saudi Arabia’s GDP,” he added.

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