Startups that want to be like the Mark Zuckerbergs of the tech world need to get their sales pitches prepared. Saudi Arabia will be pumping in billions of U.S. dollars into tech businesses across the globe.
The kingdom, rich from the largest oil reserves in the world, will join forces with Softbank the telecom giant based in Japan to form a tech investment fund with a value of $100 billion, which will make it one of the worlds largest.
Over the upcoming decade, the fund will be the technology sector’s largest investor, said Masayoshi Son the CEO at Softbank in a Friday statement.
In certain ways, the two make natural partners. Oil dependent Saudi Arabia wants to desperately lessen its dependence on volatile prices of oil and Softbank has high ambitions to be a leader in global tech as growth stagnates across Japan.
The sovereign wealth fund of Saudi Arabia will put in as much as $45 billion, with Softbank adding in another $25 billion. A number of large investors around the world are discussing committing funds, said Softbank.
Both Softbank and Saudi Arabia have strong appetites for large tech investments. That has been shown recently. The Saudi fund in June invested $3.5 billion in Uber the ride-hailing startup.
Softbank dished out more than $32 million on ARM Holdings a chip designer based in Britain during July, which did not please shareholders of the company.
Softbank has taken a hit as well from its acquisition of Sprint the U.S. wireless carrier that took place in 2012. However, other investments proved to be quite savvy, including an early investment with Alibaba the e-commerce giant based in China.
Investors appeared as if they welcomed the most recent announcement of the fund pushing shares of Softbank up over 3.2%.
Deputy Crown Prince Mohammed bin Salman leads Saudi Arabia’s efforts to bring diversity to its economy. He said Softbank and the strong investment performance of Son were key reasons for making the investment in the tech fund.
Neither of the two partners appears deterred by the warnings of possible bubbles in the big startup as well as established tech businesses valuations across the U.S.
In India, the funding has plunged of recent for startups.
Son added that the fund will help to further accelerate the ongoing information revolution by making a contribution to its continued development.
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