The Trump regime sure isn't going to do a damn thing to Riyadh and Crown Prince Mohammed bin Salman about the obvious murder of dissident Saudi journalist Jamal Khashoggi, but don't expect Democrats to lift a finger either. The Saudis may be able to wreck the GOP's corporate energy giant contributors with a massive oil spike as I pointed out the other day, but Saudi royals also own a healthy chunk of Silicon Valley and the Dems too.
As international backlash grows over Saudi Arabia’s alleged involvement in the possible murder of a journalist, Silicon Valley faces a potentially unsettling fact: The kingdom is now the largest single funding source for U.S. startups.
Crown Prince Mohammed bin Salman has directed at least $11 billion of Saudi money into U.S. startups since mid-2016, either directly or through SoftBank Group Corp.’s $92 billion tech-focused Vision Fund, to which the Saudis committed $45 billion, according to a Wall Street Journal estimate of data from research firm PitchBook. The total invested by the kingdom so far in U.S. startups is far bigger than the total raised by any single venture-capital fund.
Some of tech’s most prominent young companies have welcomed Saudi money, including Uber Technologies Inc., office-sharing company WeWork Cos. and augmented-reality device maker Magic Leap Inc. For Uber, the situation could be particularly dicey: A prominent Saudi official sits on its board.
For now, the companies are preferring to keep quiet about the escalating controversy. Of the 22 startups in which the Vision Fund or the Saudis have invested, all but one declined to comment or didn’t respond to requests. Uber pointed to a recent statement from CEO Dara Khosrowshahi, who said he planned to pull out of a Saudi-sponsored business conference and that he was troubled by the reports about the journalist, Jamal Khashoggi.
For the startup community, “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,” said Venky Ganesan, former chairman of the National Venture Capital Association and an investor at Menlo Ventures, which has invested in Uber. “It’s more than about startups and money—it’s fundamentally about what you think about human rights.”
Tech companies are in a particularly conflicted spot given the idealistic missions espoused by many leaders in Silicon Valley, where employees routinely rebel over contracts they find unprincipled. WeWork, for instance, has banned meat over concerns about its environmental impact.
“Silicon Valley has been incredibly hypocritical in accepting investments from an anti-Semitic country, [which] criminally punishes gays and de jure discriminates against women,” said Keith Rabois, a venture capitalist at prominent firm Khosla Ventures, in an email.
So should the Saudi choose to pull the plug on tens of billions in startup funding, the already shaky tech sector is going to take a gigantic nosedive, along with California's economy. Of course, sanctions against Riyadh may make that choice an involuntary one.
Just remember that it's not only the GOP fossil fuel business that could get wrecked over the Khashoggi backlash (although there's the theory that this is a bluff). Both parties are deep into Saudi pockets, and this is something where the Democrats should have divested themselves from this mess and from Silicon Valley years ago.
Even if the Saudis can't command the oil market like they used to, they can certainly hurt Silicon Valley, no question. Oh, and who benefits the most from higher oil prices and Saudi oil production cuts in the meantime as the backlash builds?
Any other questions as to what's really going on here?
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