Sources: a16z, Tiger Global, IVP, and other VCs are touring Saudi Arabia, the UAE, and Qatar to build ties with sovereign wealth funds during the funding crunch
The Gulf tour is the visible step in a reversal a16z has been leading all year: days earlier, Horowitz openly began courting Saudi money, arguing Washington had done little for builders while Riyadh was willing to write checks. The Saudi Public Investment Fund then listed roughly 35 existing partnerships with US firms including a16z, Coatue and Insight Partners, showing these relationships were already institutional rather than one-off cheques.
What changed is posture and urgency. In 2016, VCs were publicly split on whether taking Saudi money was acceptable; now several of the largest US firms are flying to Riyadh, Abu Dhabi and Doha because exit markets are shut and traditional LPs are tapped out. The pattern has since compounded into scale bets like PIF's reported ~$40B AI fund discussions with a16z and others.
First-order effects
The touring firms get a live line to the deepest remaining pools of growth capital at exactly the moment their portfolio companies need follow-on funding and their own fundraising cycles have stalled.
PIF and its UAE and Qatari counterparts gain leverage over terms and access — they can now choose among marquee firms competing for the same commitments, rather than being vetted as reputational risks.
Second-order effects
VCs that stay home face a two-sided squeeze: scarcer domestic LP dollars and rivals whose Gulf-backed funds can keep deploying into competitive deals, forcing laggards onto similar delegations.
The relationships seed direct Gulf deployment, not just LP checks — a16z's later lead in Riyadh-based fintech software firm Stitch's $25M Series A, its first Gulf investment, shows sovereign ties converting into local deal flow.
Third-order effects
If the crunch persists, the LP base of US venture structurally rebalances toward sovereign wealth funds, giving oil-funded state investors durable influence over which technologies — AI above all, per the reported $40B fund talks — get capitalized.
The stigma threshold keeps moving: what required debate among VCs in 2016 is now an open marketing trip, normalizing state-capital entanglement in Silicon Valley's funding stack and likely inviting future scrutiny of those ties.
The trend: US venture capital is re-anchoring its funding base in Gulf sovereign wealth funds, trading a decade of reputational caution for access to capital as domestic liquidity dries up.
“Dealing with nations such as Saudi Arabia is the Faustian bargain these firms have made by scaling up...venture capital went from being the Hermès Birkin bag of investing to Target.” https://www.ft.com/...
The Middle Eastern money saved the PE/VC world in the early 90s for those who recall or read on the subject. Question is how this is going to help these days when the MEA funds are already major investors in the space? https://www.ft.com/...
This is a remarkable sentence for anyone following oil or tech over the last five years. Reminder that KSA balanced its budget in 2022 for the first time in nearly a decade. https://twitter.com/...
“The Four Seasons in Riyadh is basically Palo Alto.” “I don't change my values and principles because a funding environment is difficult.” “US is buying oil from Saudi, we're selling them drones, where do you draw the line?” https://www.ft.com/... https://twitter.com/...
Silicon Valley investors are touring the Middle East, seeking to build long-term ties with sovereign wealth funds during the worst funding crunch for venture capital firms in almost a decade. https://www.ft.com/...
“That has also meant that some VCs have quietly reversed earlier decisions to refuse meetings with, or cash from, Saudi Arabia over concerns about its human rights record following the 2018 murder of journalist Jamal Khashoggi.” https://www.ft.com/...
'A year ago, Horowitz's trips to Saudi Arabia would have been an anomaly among VCs flush with cash and keen to avoid the moral predicament of dealing with states with poor human rights records. Now the Middle East is buzzing with US start-up investors.' https://www.ft.com/...
“These guys have built their models on high-volume, high-velocity investors — now they are a prisoner to the capital cycle,” said a partner at a venture fund with more than $4bn under management. Silicon Valley VCs tour Middle East in hunt for funding https://www.ft.com/...
“I don't change my values and principles because a funding environment is difficult,” Keith Rabois on his reluctance to take money from Saudi even as many other funds are racing for it. https://www.ft.com/...
“some VCs have quietly reversed earlier decisions to refuse meetings with, or cash from, politically controversial nations such as Saudi Arabia.” Shocked, I tell you. https://www.ft.com/... via @FT
“The Four Seasons in Riyadh is basically Palo Alto” Superb, detailed report about Silicon Valley VCs and their new love affair with Middle Eastern sovereign wealth funds - in @FT by @Tabby_Kinder & @GeorgeNHammond https://www.ft.com/...