When Uber announced that it was getting $3.5 billion from Saudi Arabia’s Public Investment Fund, the global startup community must have heaved a collective sigh of relief. As funding slowed down in Silicon Valley and spread across the continent, startup founders were beginning to worry about marked down valuations and the credit crunch that came with the funding slowdown.
Now it seems, sovereign wealth funds, long known for their conservative stance with tech investments, is ready to not just join the startup scene, but provide the much needed cash injection that mega startups need as funding dry up elsewhere.
Besides Uber, other much publicised and bloated companies have benefited from such link ups. Singapore’s Temasek has invested heavily in many startups including South-east Asia’s ecommerce giant, Lazada and Jack Ma’s Ali Baba. China’s Investment Corp participated in a fundraising round with ANT Financial, the finance and investment company affiliated to Ali Baba.
Back in the Arabian world, the Kuwait Investment Authority participated in a $165 million funding round for wearable US device maker, Jawbone while the Qatar Investment Authority pumped capital into Indian ecommerce giant, Flipkart.
Happily for startups, the current number of sovereign wealth funds signing big cheques makes up only a handful of the total sovereign wealth funds in the world. More government investment bodies are due to warm up as the scene matures. No doubt their deep pockets will be reserved for the global players in later funding stages as investments in this stage are less volatile.
It is still much needed good news for an industry that is still experiencing a murky outlook halfway into 2016.