In Silicon Valley, Saudi money continues to pour in at startup, despite negative reactions

Two startups – View Inc., a manufacturer of light-adjustable glass, and Zume Inc., which uses robots to make pizzas – announced last week a total investment of $ 1.5 billion from the Vision Fund Fund, of SoftBank, supported by Saudi funds.

At the end of last month, Katerra Inc., an innovator of real estate construction based in the valley, reached an agreement in principle with the Saudi government to build up to 50,000 housing units a year for the kingdom . This followed a $ 1 billion fundraising drive led by Vision Fund earlier this year, which valued Menlo Park, California, at more than $ 3 billion.

At the same time, negotiations continued in recent weeks for an agreement in which SoftBank would invest between $ 15 and $ 20 billion to acquire a majority stake in WeWork, probably with Vision Fund money, according to knowledgeable people. discussions. A spokeswoman for WeWork declined to comment.

The agreements and negotiations suggest that at least part of Silicon Valley remains willing to do business with Saudi Arabia and the SoftBank fund it supports after Khashoggi's terrible assassinations by Saudi agents at the consulate of kingdom in Istanbul on October 2nd.

Turkish allegations of Saudi Arabia's involvement in the killings of early last month have prompted a number of companies, including some from Silicon Valley backed by SoftBank, to cancel their participation in the conference. October in Riyadh sponsored by the Saudi sovereign wealth fund.

Endeavor LLC, Hollywood's largest arts agency, is trying to end its activities with Saudi Arabia, the Wall Street Journal reported last month. The Virgin Group of Richard Branson and many lobbying companies in Washington have announced that they are canceling or suspending agreements with the Saudi government. Republican and Democratic legislators have called for the reduction of ties with the kingdom.

Other companies, particularly in the energy sector, defended the controversy in Saudi Arabia.

Saudi Arabia, which initially claimed Khashoggi had left the consulate alive, has since admitted to being killed inside. He says he investigates and denies any connection with his Crown Prince, Mohammed Bin Salman.

Masayoshi Son, chief executive of SoftBank, told a profit conference on Monday that he was not aware of any company that would have refused SoftBank money because of its ties to Saudi Arabia . He denounced the killing of Mr. Khashoggi and said "there may be a slight impact" on his ability to invest in companies in the future, but that the Japanese conglomerate will continue to work with the company. kingdom.

"We have an obligation to the Saudi people to help manage their financial resources to diversify their economy," he said.

The stakes are high in Silicon Valley. Saudi Arabia has become the largest funder of US startups in recent years as it has sought to diversify its economy by directing a large portion of its public investment fund to technology. According to a Wall Street Journal analysis, the kingdom has committed more than $ 12 billion to US startups since mid-2016, primarily through its $ 45 billion commitment to the $ 92 billion Vision Fund. from SoftBank. SoftBank has autonomy over most investment decisions of the fund.

In Silicon Valley – a place where business leaders often openly talk about politics and founders of startups often say that they are committed to improving the world – the reaction to international reaction from a huge benefactor was relatively moderate. Entrepreneurs and venture capitalists have generally refused to talk publicly about Saudi money in recent weeks.

US representative Ro Khanna, a Democrat who represents much of Silicon Valley, said startups should reject Saudi money, especially considering his involvement in the war in Yemen.

Saudi-funded companies or Saudi-backed funds "would be complicit in taking money out of a regime that is engaged in some of the world's most brutal human rights violations." ", did he declare.

View, based in Milpitas, Calif., And Zume, Mountain View, declined to discuss Saudi participation in their funding. Both companies were in talks with the Vision Fund before the death of Mr. Khashoggi.

View, which automatically darkens and darkens windows, said Friday it raised $ 1.1 billion from the Vision Fund. Zume, who uses robots to cook pizzas in delivery trucks, has raised $ 375 million from the fund, according to someone close to the record. The company announced the financing but did not reveal its source publicly.

Katerra, a three-year-old company based in Menlo Park, Calif., Is trying to make construction more efficient by bringing architects, engineers, contractors and builders into the same business and creating a chain-like manufacturing process. mounting for construction parts. .

Katerra President Michael Marks signed a memorandum of understanding in Riyadh nearly two weeks ago with the Saudi government in a competition with other companies for the construction of housing for a Saudi public agency .

If the Saudi agreement is finally reached, it will be far more important than anything that Katerra has signed to date, involving the construction of eight factories in Saudi Arabia and new housing.

– Katie Roof contributed to this article.

Write to Eliot Brown at [email protected]