Are we making money for Saudi Arabia, ask start-ups

When John Vrionis and Jyoti Bansal set out to raise money this year for their first venture capital fund, Unusual Ventures, industry peers advised them to go after the easy money — sovereign wealth funds like those managed by Saudi Arabia and Abu Dhabi, which have become major investors in Silicon Valley.
 
“People would say, ‘It’s really easy — they’ll give you as much money as you want,’” Vrionis said.
 
But the pair said they didn’t feel comfortable making investments on behalf of repressive governments. Instead, they sought investments from nonprofit groups, historically black universities and children’s hospitals.

 

That move has helped them avoid difficult conversations in recent weeks, as gruesome details emerged about the murder in Istanbul of Jamal Khashoggi, a journalist who had been critical of the Saudi Arabian government. On Wednesday, the chief prosecutor of Istanbul said Khashoggi had been strangled almost as soon as he stepped into the Saudi Consulate in the city. Some of the agents who have been detained in connection with the killing have been linked to Crown Prince Mohammed bin Salman. “This has started the conversation of ‘Where is the money coming from?’” Bansal said.
 
Other Silicon Valley investors are in a more uncomfortable position. Some start-up founders are asking their investors whether they have financial connections to a foreign government with a poor human rights record. Others say that from now on, they will demand to know the source of investment money.

 
But it is easy for founders to ask where the money is coming from, and much harder for them to take action. Often, it is difficult to figure out where venture capital firms are getting their money, because they rarely disclose that information.

©2018 The New York Times News Service