In mid-June, a delegation of Saudi Arabia officials hosted a
dinner at San Francisco's Fairmont Hotel to court venture
capitalists including Marc Andreessen and Michael Moritz.
In addition to discussing tech trends, Deputy Crown Prince
Mohammed bin Salman indicated his kingdom aimed to do more Silicon
Valley deals like the $3.5 billion investment in Uber Technologies
Inc. announced two weeks earlier, according to a person who
attended the dinner.
As Saudi Arabia and its oil-rich sovereign-wealth fund prepare
to become bigger players in tech deal making, Silicon Valley
insiders are weighing the consequences. Technology investors like
to tout the social benefits of the companies they support. But the
industry often overlooks investors' own principles and beliefs,
focusing more on their investment record and size of their
checks.
To some venture capitalists and founders, Uber's agreement with
Saudi Arabia represented its tacit endorsement of that government.
Saudi Arabia is the only country in the world where women aren't
allowed to drive, and one of several countries where homosexuality
is illegal.
"It would not have been a choice I would have made if I were
them," Wesley Chan, a partner at venture-capital firm Felicis
Ventures, said of Uber.
Mr. Chan, who is gay, said he wouldn't accept money from Saudi
Arabia or any other investors whose values he didn't agree with.
"We want to make money for folks who are tolerant and agree with
our principles of diversity," he said.
Uber executives said its decision to take the investment and to
add a Saudi official to its board isn't an endorsement of Saudi
policies. The company and its allies say the ride-hailing service
has become a valuable tool for Saudi women, who make up 80% of its
passengers there. Some Uber supporters also note that the U.S. and
Saudi Arabia are allies, and that other U.S. companies do business
with the government.
"Of course I and everyone on Uber's board think women have the
right to drive!" Arianna Huffington, the media entrepreneur and
liberal commentator who became an Uber director earlier this year,
said in an email. "But absent that, Uber is at least providing much
needed mobility for women in Saudi Arabia," she said.
While Saudi women have benefited from the ride-hailing app, some
of them were outraged that Uber accepted the Saudi investment. They
accused the company of not just benefiting from the driving ban but
also of effectively favoring it.
After the deal was reached, an Arabic-language hashtag calling
for a boycott of Uber gained traction on Twitter in Saudi Arabia,
with some women posting pictures to show they had deleted the
company's app from their smartphones.
Sovereign-wealth funds such as Saudi Arabia's increasingly are
investing in tech because it is one of the few areas where they can
find a sizable investment return, said Venky Ganesan, a venture
capitalist at Menlo Ventures, an early investor in Uber.
Drawing the line on investors isn't clear-cut. Singapore, the
most active investor in U.S. tech companies, is described by Human
Rights Watch as limiting the freedom of expression of its citizens.
Singapore's sovereign-wealth fund, GIC Pte Ltd., is an investor in
top venture firms, including Accel Partners, Battery Ventures and
Sequoia Capital.
Qatar, whose sovereign-wealth fund backed Uber in 2014, has been
scrutinized over its treatment of low-paid migrant laborers.
The Saudi government plans to turn its sovereign-wealth fund
into the largest in the world, with assets eventually worth nearly
$3 trillion, and it is looking for non-oil investments abroad as
part of its Vision 2030 plan to diversify its economy. Saudi
officials are making overtures to Silicon Valley.
Kristine Beckerle, who studies women's rights issues in the
Middle East for Human Rights Watch, said Western technology
companies and investors have a unique opportunity to help shape its
social policies.
"For tech companies, you are in this amazing position where you
have one of the most powerful people in the kingdom coming to meet
with you," Ms. Beckerle said. "Now is the moment where they do have
leverage."
In addition to venture capitalists, the delegation led by the
deputy crown prince also visited with tech CEOs including Apple
Inc.'s Tim Cook, Facebook Inc.'s Mark Zuckerberg and Microsoft
Corp.'s Satya Nadella. Messrs Andreessen and Moritz declined to
comment on the VC dinner.
Adnan al-Sharqi, a senior official at Saudi Arabia's investment
agency who participated in the U.S. trip, said the Silicon Valley
visit was aimed at inviting tech companies to invest in Saudi
Arabia. He said "the trip has opened up what will be a sustained
dialogue to discover how Silicon Valley companies and Saudi Arabia
can deepen existing partnerships."
Under pressure from low oil prices that are hurting government
coffers, Riyadh is actively looking for investments abroad. The
agreement with Uber represents the country's biggest such
investment since Riyadh announced its long-term plan to overhaul
the economy in April.
The Saudi government is striving to present a softer side. This
year, for instance, the royal court stripped its religious police
agency of its powers to arrest people, reducing it to an advisory
body. The group is tasked with enforcing Saudi Arabia's strict
interpretation of Islam.
U.S. venture capitalists and tech entrepreneurs in interviews
were divided on whether they would accept money from Saudi
Arabia.
Some said the U.S. government's dealings with the Saudi
government set a precedent that businesses can follow. They also
argue that Americans who buy gasoline are supporting an industry
that is Saudi Arabia's biggest source of income. Others said that
by accepting Saudi money, Uber missed an opportunity to help
promote social change.
Unlike public companies, closely held startups can choose their
investors. And in Silicon Valley, where companies often profess to
work toward a public good as well as profits, the choice of
investors can reflect the sincerity of that mission.
"I imagine not every entrepreneur will feel comfortable with
sovereign-wealth funds from countries with different priorities and
belief systems," said David Pakman, a partner at New York venture
firm Venrock, who declined to comment specifically on Uber or Saudi
Arabia.
Lukas I. Alpert contributed to this article.
Write to Douglas MacMillan at douglas.macmillan@wsj.com and
Margherita Stancati at margherita.stancati@wsj.com
(END) Dow Jones Newswires
July 17, 2016 22:15 ET (02:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Aug 2024 to Sep 2024
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Sep 2023 to Sep 2024