After Khashoggi's murder, Saudi Arabia and SoftBank seem unlikely to lose out on many deals; sources say a $500M Softbank-led investment in Flexport is underway
Axios : Tweets: @billkristol , @joenbc , @alex , and @teddyschleifer See also Mediagazer Tweets: Bill Kristol / @billkristol : Tom Barrack, on Lincoln's birthday in Dubai: “Whatever happened in Saudi Arabia, the atrocities in America are equal, or worse...” And so Trumpism “blows out the moral lights around us” and insists “there is no right principle of action but self-interest.” http://gulfnews.com/... Joe Scarborough / @joenbc : The Trump Mindset when defending dictators: Blame America First. And Tom, if America is so bad, why don't you renounce your American citizenship and move to Riyadh. http://twitter.com/... @alex : not a great look for capitalism http://www.axios.com/... http://twitter.com/... Teddy Schleifer / @teddyschleifer : The Saudis have long been planning to open an office in San Francisco.I sort of assumed they wouldn't have the gall to do it after the reaction to Khashoggi. Turns out I was wrong.http://www.bloomberg.com/ ... See also Mediagazer
Context & Ripple Effects
When Jamal Khashoggi was murdered in October 2018, the question hanging over Silicon Valley was whether its deepest funding source would become toxic. The early signs pointed that way: Silicon Valley stayed mostly quiet about its Saudi ties as the scandal grew, and SoftBank — whose Vision Fund received $45B from Saudi Arabia faced its own reckoning over how to handle the crisis.
First-order effects
- Flexport stands to receive a reported $500M led by SoftBank, making it one of the first major beneficiaries of post-murder Vision Fund dealmaking.
- US founders' revealed preference is now explicit: weeks after the killing, startups like View and Zume had already raised $1.5B from the Saudi-backed fund, per related coverage.
Second-order effects
- Rival investors lose their hoped-for opening: if founders won't boycott Saudi-backed capital, competitors must match Vision Fund-scale checks rather than wait for it to be shunned.
- Saudi government-linked vehicles such as the tech university endowment and Aramco's Wisayah, which already invest in US VC firms often confidentially, gain cover to keep deploying without public scrutiny.
Third-order effects
- Reputational risk is being priced at roughly zero in venture capital: the pattern suggests moral pressure does not redirect founder behavior when a single fund controls this much late-stage capital, concentrating power further in sovereign-wealth-backed vehicles.
The trend: Sovereign-wealth-backed mega-funds are proving insulated from political scandal, consolidating their grip on late-stage startup financing regardless of reputational shocks.