Has Saudi money become radioactive now? – TechCrunch – Download Top Apps Sofftware Articlez

Has Saudi money become radioactive now? – TechCrunch


Yesterday, a Saudi news outlet broke the news that such Silicon Valley big wheels as Marc Andreessen, Sam Altman and Travis Kalanick are advisors to a $500 billion megacity project being built by the country, which has pitched it as a model of what future cities will look like.

The announcement’s timing was not ideal for members of this 19-member list, who signed on to the project months ago in some cases. At the moment, there’s growing outrage over the week-long disappearance of dissident Saudi journalist Jamal Khashoggi, who Turkish officials say was murdered last week in the Saudi Consulate in Istanbul on orders from the Saudi Royal family, then cut into pieces with a bone saw and removed from the building. It’s graphic and upsetting to contemplate and, importantly, it has not been proven. But the widespread and growing assumption that Saudi intelligence agents did something to Khashoggi (there is no evidence to support that he left the building) has put Saudi Arabia’s Crown Prince Mohammed bin Salman Al Saud under the world’s glare. Indeed, the advisory board announcement seemed very much a way for the prince, known as MBS, to brandish his powerful American friends just as many in the U.S. are beginning to wonder exactly what he is capable of.

We might have wondered sooner, given that MBS has been fairly consistent about his lack of tolerance for either criticism or rivals since his rise to prominence was sealed by his appointment as crown prince in June of last year. Though MBS has been widely lauded for his reformist tendencies — he has “stood up to the religious elite to impose breathtaking social changes, including letting women drive and allowing concerts and cinemas,” as noted this summer in a WSJ opinion piece — he has also led air raids in Yemen that have killed many thousands of civilians (with White House support, to the dismay of lawmakers from both political parties).

Saudi Arabia also detained more than a dozen women’s rights activists over the summer. When Canada’s foreign ministry rebuked Riyadh for jailing them, saying it was “seriously concerned” with the arrests, Saudi Arabia expelled the country’s ambassador, suspended flights to and from Toronto, barred its citizens from receiving medical care in Canada and froze new trade and investment with Canada worth billions of dollars. It also announced plans to move thousands of Saudi scholarship students out of Canadian schools.

Meanwhile, last year, MBS directed Saudi officials to lock up for several months more than 300 businessmen and royal family members in what was billed an anti-corruption campaign, one that led to MBS’s control of more than $100 billion in seized assets. As later reported by The New York Times, at least 17 of those detainees were “hospitalized for physical abuse and one later died in custody with a neck that appeared twisted, a badly swollen body and other signs of abuse, according to a person who saw the body.”

The maneuver was widely reported by U.S. outlets, yet MBS came to the U.S. just months after this high-profile sweep and he was welcome with open arms. Donald Trump invited him to the White House and has only worked to solidify that attachment, one characterized as “abnormal and unseemly” by international relations scholars.

Silicon Valley CEOs also embraced MBS on that spring tour. MBS visited with Google co-founder Sergey Brin and CEO Sundar Pichai; Magic Leap CEO Rony Abovitz; and Virgin Group founder Sir Richard Branson, among others who praised his social progressiveness. What they apparently liked even more: his ambitious plans to reduce Saudi Arabia’s dependence on oil, including by plugging more of the kingdom’s money into American companies.

In fact, looking the other way at MBS’s other goings-on hasn’t been all that hard, given the money at stake. Tesla’s Elon Musk didn’t have an issue with it this past summer. SoftBank doesn’t have qualms with it, either. In fact, SoftBank CEO Masayoshi Son has bragged that he convinced MBS to provide $45 billion for SoftBank’s massive $100 billion fund in just 45 minutes’ time. And just last week, MBS said he is committing $45 billion to a second Vision Fund.

If the alarming disappearance of Khashoggi, who was most recently working as a Washington Post columnist, changes the calculation in any way, no one is willing to say. Neither representatives from SoftBank’s Vision Fund nor roughly 10 SoftBank-backed founders responded to requests for comment yesterday.

A number of venture capitalists whose companies have received funding from SoftBank were also unresponsive when asked their opinion yesterday about SoftBank and whether Khashoggi’s disappearance might impact how startups think about their fundraising. In fact, just one, Pejman Nozad of Pear Ventures, who has seen two portfolio companies — DoorDash and newly public Guardant Health — raise later-stage funding from the Vision Fund, responded at all. “There is an overflow of capital in tech, from seed to pre IPO. Companies that need $500,000 in seed funding are ending up raising $3 million, and those who need $50 million raise $500 million. Only history will tell us if this is healthy or not,” said Nozad in an email.

Longtime VC Jeff Bussgang of Flybridge Capital Partners in Boston offered a slightly more nuanced view when asked about MBS but not Khashoggi specifically, noting that venture and private equity firms have been raising money from Middle East capital sources for many years and that “typically, entrepreneurs don’t like to focus on politics and historically have not cared very much where the money came from, ” adding that the few lines entrepreneurs will not cross is “taking money from the PLO or Iran.”

Wrote Bussgang in an email, “Yes, it would be great if all VC money came from poor widows and orphans, but that’s obviously not the case. And it is obviously a subjective process to determine whether the money is from a righteous source. Is Starbucks a righteous source?”

Bussgang was referring to a recent incident at Starbucks involving two black men who were wrongly arrested in a Philadelphia Starbucks after an employee called the police. Which, while terrible, isn’t really comparable with killing innocent civilians in Yemen, jailing human rights activists or others of MBS’s alleged pastimes, as more startup founders should perhaps think about when it comes to fundraising.

In fairness, many in the U.S. and elsewhere are waiting to see if Khashoggi materializes. While it seems less likely by the day that he will, never knowing what happened is undoubtedly the best possible outcome for those in tech and the White House, who would rather be affiliated with a reformer than a murderous despot. Let’s face it, a missing Washington Post columnist may look today like a miscalculation, but as these cycles go, Khashoggi may be yesterday’s news by tomorrow, if you’ll forgive the pun. Everyone can then get back to business.

It’s almost comical when one considers that many of these same people — especially Silicon Valley leaders — can muster outrage over a memo about gender diversity.

Mostly, it’s just hugely depressing.

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