As the scandal of Khashoggi's disappearance grows, Silicon Valley is mostly quiet on its connections to Saudi Arabia, the largest funding source for US startups
AI Is Getting Baked Into Everything From Tech Companies Tweets: Ragp Soylu / @ragipsoylu : SIGNIFICANT #Khashoggi updates: • Turkish official tells CNN that Khashoggi was cut into pieces • Turks to AJ, Saudi autopsy doctor Salah Al Tabiqi did the cutting • Cutting lasted for 7 minutes, doctor told colleagues to listen music during the op • Recordings exist Steve Case / @stevecase : I was looking forward to returning to Riyadh this month to speak at the Future Investment Initiative conference, and participate in a Red Sea Project meeting. In light of recent events, I have decided to put my plans on hold, pending further information regarding Jamal Khashoggi. Tom Gara / @tomgara : One of the better self-owns in recent Silicon Valley history in the WSJ today http://www.wsj.com/... http://twitter.com/... Yeganeh Torbati / @yjtorbati : To me, this story makes clear that the controversy over “Davos in the Desert” is a bit of a red herring, given how deeply entangled Silicon Valley is with Saudi Arabia http://www.wsj.com/... Joshua Holland / @joshuahol : Saudi Arabia is is “now the largest single investor for U.S. startups, with stakes in Uber, WeWork and Magic Leap.” Related: Silicon Valley is trash. http://www.wsj.com/... Tero Kuittinen / @teroterotero : What a black comedy this is. American President running interference for a Saudi king who pledges to investigate what his own assassins have done. https://twitter.com/... Dan Primack / @danprimack : Hold up. So MBS now acknowledges something DID happen in the Turkish Consulate? Thought official Saudi position was still that Khashoggi walked out on his own. http://twitter.com/... Tim Bradshaw / @tim : Add Andy Rubin to the list of execs pulling out of the Future Investment Initiative conference in Riyadh (aka “Davos in the desert") after the disappearance of Saudi journalist Jamal Khashoggi https://www.ft.com/... Kim Masters / @kimmasters : Do you need to hear the tape? http://twitter.com/... Howard Dean / @govhowarddean : Thank you for standing up for human rights, which the US government is apparently no longer willing to do. http://twitter.com/... Dan Primack / @danprimack : Virgin Hyperloop disputes FT story about Saudi govt putting project on hold because of @richardbranson. )fwiw, i had heard same rumor). per spox:"We have received no confirmation from the government that our progress in the region has been put on hold." @emptywheel : Can we talk about what Turkey plans to accomplish with their exposure of the Khashoggi assassination?? It's not like Turkey is opposed to persecuting journalists or anything. Is this about getting rid of MBS? https://twitter.com/... Dave Pell / @davepell : People in Yemen reading the Khashoggi coverage are like, “Wait, the world didn't know that Saudis killed civilians with America's OK?” Alexia Bonatsos / @alexia : A Saudi guy walks into the Saudi embassy in Turkey to get marriage papers and the Saudis dismember him, with a bone saw. https://www.nytimes.com/... Way to improve your “brand” Saudi Arabia. Scott Galloway / @profgalloway : @richardbranson and @Virgin Group are cutting ties with the Saudi Government after the disappearance of Jamal Khashoggi Right. On. Brother. Dan Primack / @danprimack : Justification argument I've now heard from two people who don't plan to stop doing biz w/ Saudis over Khashoggi: All governments do awful things. Ryan Gallagher / @rj_gallagher : This is a good timeline & summary of Jamal Khashoggi's disappearance. Some of the details are chilling. “A consulate source in the building at the time heard screams & calls for help before a sudden silence.” https://www.theguardian.com/ ... Eliot Brown / @eliotwb : And Keith Rabois of Khosla w/ this: “Silicon Valley has been incredibly hypocritical in accepting investments from an anti-Semitic country, [which] criminally punishes gays and de jure discriminates against women,” Scott Austin / @scottmaustin : Saudi Arabia is the biggest single funding source of U.S. startups having invested at least $11 billion since mid-2016 “There are incidents where you have to decide which side of history you want to be on, and if this is true, this is one of those.” https://www.wsj.com/... Scott Austin / @scottmaustin : Heavy words directed at startup founders in light of the Saudi controversy https://www.wsj.com/... pic.twitter.com/2bZtEOCsrZ Eliot Brown / @eliotwb : Silicon Valley investors have been reluctant to comment, but Venky Ganesan of Menlo Ventures & former chair of NVCA trade group, said this: “There are incidents where you have to look and decide which side of history you want to be on, and if this is true, this is one of those.” Eliot Brown / @eliotwb : The largest funding source for US startups right now: Saudi Arabia, which has more than $11 B invested in US startups since mid-2016, through SoftBank Vision Fund or directly we called 22 of those that have taken saudi money. Only one, uber ,commented. https://www.wsj.com/...
Context & Ripple Effects
The silence is the story: after Jamal Khashoggi's disappearance, only a handful of figures moved — op-eds demanded Silicon Valley return Saudi billions, Steve Case postponed his Future Investment Initiative appearance, Andy Rubin withdrew, and Virgin Group cut ties — while the venture firms actually holding Saudi capital stayed quiet. That reticence tracks how the money flows: as earlier reporting showed, government-linked vehicles like the main tech university endowment and Aramco's Wisayah invest in US VC firms often confidentially, so most limited partners never have to say anything publicly.
The stakes are structural rather than symbolic. Saudi Arabia has put over $11B into US startups since mid-2016, making it the largest single investor, and the question posed back in 2016 — whether founders would take sovereign money as tech deals grew inside sovereign-wealth portfolios — was answered before this crisis ever started.
First-order effects
- Founders and executives face an immediate optics decision: Case and Rubin pulled out of the Future Investment Initiative, but the funds themselves — and the VCs they back — issued no comparable break, leaving the conference to proceed without them.
- The named players with direct exposure (Vision Fund-backed startups, VC firms taking Saudi LP money) absorb the reputational hit without changing behavior, because no one is forcing disclosure.
Second-order effects
- Deal flow barely flinches: within weeks, View and Zume raised $1.5B from Saudi-backed money despite the furor, signaling that founders price the controversy as tolerable against the alternative of tighter capital.
- Competing sources of capital gain a talking point but not yet leverage — non-Saudi investors can market 'clean' term sheets, though the $500M SoftBank-led Flexport round shows even post-murder, Saudi-linked checks still clear.
Third-order effects
- If confidentiality around sovereign LPs holds, accountability stays personal and voluntary — individual withdrawals like Branson's or Rubin's substitute for any industry-wide standard on whose capital is acceptable.
- The pattern points toward sovereign wealth becoming a permanent, unexamined layer of US startup funding: scandals produce episodic exits by individuals, while the underlying LP relationships persist because they are structurally invisible.
The trend: Sovereign-wealth capital is becoming a durable, low-accountability foundation of US startup financing, with reputational shocks producing individual withdrawals rather than changes in deal flow.