This Week in Startups Saudi Arabia discloses LP positions & SEC charges Frank founder with fraud | E1713
Apr 4, 2023
Saudi Arabia's Public Investment Fund reveals its venture capital affiliations, igniting debates about human rights and the moral compass of founders. The conversation shifts to the ethical dilemmas faced by entrepreneurs when accepting funds from controversial sources. A significant legal drama unfolds as the founder of Frank faces fraud charges over fabricating user accounts in a massive acquisition. This episode highlights the challenges of maintaining integrity in the startup world and reflects on the consequences of misleading investors.
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Saudi Arabia's PR Move
- Saudi Arabia disclosed its VC investments, likely a PR move to attract businesses.
- This transparency is unusual for limited partners and sovereign wealth funds.
Massive Middle Eastern Capital
- Middle Eastern wealth funds manage over $3 trillion, with Saudi Arabia's PIF at $620 billion.
- This capital could fund the entire US venture capital industry since 2016.
Engagement vs. Isolation
- Venture capitalists face a dilemma: engage with Saudi Arabia despite human rights concerns or isolate them.
- The US engages with other nations despite human rights issues for economic reasons, like China.