Billions of dollars from Middle Eastern funds are being invested in the most promising AI start-ups.

• Technology investments are being sought by oil-rich nations such as Saudi Arabia, United Arab Emirates, Kuwait, and Qatar as a means of diversifying their economies.
• Government-backed Middle Eastern funds have seen a fivefold increase in AI investing in the past year, according to Pitchbook data.
• Sources reveal that MGX, a fund from The United Arab Emirates, was among the investors seeking a share of OpenAI's latest funding round this week.

Middle Eastern sovereign wealth funds are increasingly becoming major investors in Silicon Valley's AI startups.

Middle Eastern sovereigns, including Saudi Arabia, United Arab Emirates, Kuwait, and Qatar, have been investing heavily in tech as a way to diversify their economies. In the past year, funding for AI companies in the region has increased fivefold, according to Pitchbook data.

OpenAI's latest fundraising round, which is expected to value the company at $150 billion, attracted interest from MGX, an AI fund from the United Arab Emirates, along with other investors, according to two sources who requested anonymity due to the confidential nature of the discussions.

While few venture funds can match the multibillion-dollar checks of companies like and , sovereign funds have no problem investing in AI deals. They do so on behalf of their governments, which have benefited from rising energy prices in recent years. By 2026, the Gulf Cooperation Council (GCC) countries' total wealth is expected to increase from $2.7 trillion to $3.5 trillion, according to Goldman Sachs.

The Saudi Public Investment Fund, or PIF, has surpassed $925 billion and is actively investing as part of Crown Prince Mohammed bin Salman's "Vision 2030" initiative. The PIF has investments in companies such as Uber and is also heavily investing in the LIV golf league and professional soccer.

The UAE's Mubadala manages $302 billion, while the Abu Dhabi Investment Authority oversees $1 trillion. Qatar Investment Authority has $475 billion under management, and Kuwait's fund has surpassed $800 billion.

This week, MGX, an AI fund launched in March with Abu Dhabi's Mubadala and G42 as founding partners, joined a partnership on AI infrastructure with , and Global Infrastructure Partners, with the goal of raising up to $100 billion for data centers and other infrastructure investments.

Mubadala, a venture investor from the UAE, has invested in Anthropic, an AI company that competes with OpenAI. Mubadala is one of the most active investors in AI, having made eight deals in the past four years, according to Pitchbook. In its last funding round, Anthropic refused to take money from the Saudis due to concerns about national security, sources told CNBC.

The Saudi Arabian Public Investment Fund (PIF) is in discussions with U.S. venture capital firm Andreessen Horowitz to establish a $40 billion partnership. Additionally, the PIF has recently launched a dedicated AI fund called the Saudi Company for Artificial Intelligence (SCAI).

The killing of Jamal Khashoggi in 2018, which triggered international backlash in the business community, remains a significant issue for some Western partners and start-ups regarding the kingdom's human rights record.

In the past four years, Bpifrance, a French sovereign fund, has completed 161 AI and machine learning deals, while Temasek, a Singapore-based fund, has completed 47 deals. Additionally, GIC, another Singapore-backed fund, has completed 24 deals.

Some Silicon Valley investors are concerned about a SoftBank effect, as Masayoshi Son's Vision Fund has a history of pushing companies to high valuations before going public, which ultimately led to WeWork's bankruptcy in 2019.

The U.S. has prioritized having sovereign wealth funds invest in American companies rather than global adversaries like China. Jared Cohen of Goldman Sachs Global Institute stated that there is a significant amount of capital coming from nations such as Saudi Arabia and UAE, and a willingness to deploy it globally. He referred to these countries as "geopolitical swing states."

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