TheChek News Flow

Britain cannot afford to scare foreign residents away

The end of the non-dom tax regime has been badly handled and risks economic damage

The Somerset town of Bruton has a number of wealthy homeowners, including the former chancellor George Osborne, who in 2015 took the first steps towards abolishing Britain’s non-domiciled tax regime for foreign residents. Until recently, it was also home to Iwan and Manuela Wirth, Swiss co-founders of Hauser & Wirth, the global contemporary art gallery.

The Wirths have relocated to Switzerland, having been officially resident in the UK since 2016. They had family and professional reasons and were not non-doms, a status that was finally abolished by the government in April. But all wealthy foreign residents now face a 10-year deadline after which their global assets are liable to UK inheritance tax of up to 40 per cent.

They are among many in this group who are leaving the UK, some alienated by rapid changes in a tax regime meant to lure them. “I looked at the 10 reasons I was given for coming and they’d all changed, so I decided to go,” one reports having been told by another. Departures include Lakshmi Mittal, the steel billionaire, and Nassef Sawiris, Egypt’s richest man.

The full impact will not be known for a year or two, as tax returns reveal how many of the 74,000 non-doms have left, and tax advisers and financial lobby groups have reason to exaggerate. But there is a growing risk of the Treasury not only failing to gain an estimated £33.8bn in taxes over five years, but losing revenues if more than a quarter of those affected leave.

It is plain that UK chancellors were lulled into a false sense of security by the fact that Osborne’s initial abolition of permanent non-dom status did not provoke much flight. Jeremy Hunt followed in 2024 by limiting to four years the full fiscal benefit of foreign residency and Rachel Reeves added 10-year inheritance tax liability. Big mistake.

The latter is scaring away many foreign residents whose estates would be lower taxed elsewhere. Italy has attracted many former UK non-doms with an offer of being able to shelter overseas assets for 15 years in return for an annual payment of €200,000. It also has an inheritance tax rate starting at only 4 per cent of an estate.

The 200-year-old non-dom regime was arbitrary and indefensible. But the rapid transition to a regime that fails Reeves’ claim of being “internationally competitive” has proved very unnerving. It does not really help that Nigel Farage, Reform’s leader, has promised a 10-year offshore tax shelter for a one-off payment of £250,000. Who could depend on any of this?

Consider why the UK needs a special regime for foreign residents. The US has global taxation for all, despite Donald Trump’s offer of a $5mn “Trump Card” route to citizenship. But US taxation is generally lower (it has a much higher estate tax threshold) and the economic opportunity is greater. The UK must compete, along with others. 

There is a straightforward tax incentive to host wealthy foreigners: the UK received £6.2bn in taxes from non-doms in the 2022-23 tax year, despite the fact overseas income and assets were mostly sheltered. By definition, they can pick where to settle, while the UK depends on its high earners, given that 29 per cent of all income tax is paid by the top 1 per cent.

The UK also gains wider economic benefits from foreign talent: the Wirths’ presence in London and Somerset has been vital to the UK’s contemporary arts industry. This works at a less visible level: if a private equity fund tries to recruit a senior executive to London, the latter will now think harder about whether it is worth coming.

The UK has attractions, of course, from language to a stable legal system and good schools and universities. But other places have made themselves more alluring and it has been pushing its luck since Brexit. Reeves has been considering changes amid intense fiscal pressure as the scale of flight by non-doms has emerged.

Labour should go further. The four-year period the UK offers for foreign residents to shelter overseas income and assets from tax is intuitively too short: it is uncompetitive with other countries and does not give a family time to settle and put children in school before leaving again. The point of a foreign resident scheme is to entice people not only to come but to remain.

I would lengthen it and make the offer simpler, a quality that is now sorely lacking. Allow foreign residents a decade of paying UK-based taxes for an annual fee of at least £200,000 (not a Farage Card). Then make them integrate fully, keeping only offshore assets in trust for inheritance tax purposes. This might not please Labour MPs but it would benefit the country.

Introduction of military service would make it harder for companies to recruit workers

The German army’s growing need for new recruits is making businesses anxious that their struggle to find staff will get even harder.

Corporate representatives told the Financial Times that they backed efforts to bolster the military of Europe’s largest nation as Nato seeks to strengthen its deterrence against Russia.

But they are concerned that a return to some form of conscription — as well as a drive to get more civilians to serve as reservists — would further strain companies that are trying to recruit skilled workers in a tight labour market.

“The security situation is dramatic,” said Steffen Kampeter, director of the BDA, the country’s biggest employers’ group, adding that he welcomed efforts to strengthen the armed forces. But he warned that the military would be competing with civilian demand for personnel.

“Yes, we need more active soldiers,” he said. “Yes, we need to expand the system of reservists. But only a strong economy can make that possible.”

German defence minister Boris Pistorius plans to introduce a voluntary conscription model that would initially see about 5,000 18-year-olds drafted into the military each year.

But he has also acknowledged that such a scheme is unlikely to fill the large gaps in the military, floating a fallback option of a return to conscription. Until 2011, young people were compelled to either do military service or a civilian alternative.

Pistorius, who is from the Social Democrats, has not said how an obligatory enlistment model should work. But he has expressed support for the system in Sweden, where roughly 10 per cent of young people are called up each year after a screening process. 

While employment is at record highs, Germany has the shortest average working hours of any wealthy economy, according to OECD data.

The country’s new government, led by conservative chancellor Friedrich Merz, has promised to get the nation working more as part of a push to revive the sluggish economy.

Merz hopes that boosting working hours will also help with acute skills shortages in sectors such as health, education and the engineering industry.

Kampeter said this effort would be even more vital if the armed forces were going to add to competition for workers. “If the necessary personnel are pulled away from us, that means issues like weekly working hours, the length of the working life, better integration of part-time workers into the labour market — all of those topics become even more important,” he said.

A representative of another business group, who asked for their association not to be named, said they had “a lot of questions” about a return to conscription.

The person said there was “no doubt that something has to be done” about recruitment to the Bundeswehr, as the German armed forces are known. But they added: “There are two conflicting goals — economic prosperity and defence.”

A study last year by the Munich-based Ifo Institute found that it was better to spend money making a voluntary military service programme attractive, rather than resorting to conscription.

The research, which was commissioned by the German finance ministry, warned that an obligatory model would carry high economic costs for the country, as well as taking a toll on individuals and their own financial prospects by delaying their entry into study or work.

“Different people are good at different activities,” said Panu Poutvaara, one of the authors. “If you have conscription, which is not voluntary, it would force people who are not good at being in the military to serve in the military.”

The Ifo Institute found that a well-paid voluntary model that persuaded 5 per cent of Germany’s annual cohort of 18-year-olds to sign up — about 39,000 people — would cost the government €1.5bn per year in salary payments. 

That would be more than double the cost of a compulsory conscription model of the same size, which it assumed would offer a lower wage. But it would be offset by a smaller hit to gross national income. The effect would be greater if the government wanted to attract more recruits.

The military needs to expand by about 80,000 people over the next decade to meet Germany’s Nato commitments.

Senior military officials say that the size of the army reserves — made up of civilians who work with the military for a few weeks a year — needs to reach 200,000 in the years ahead.

Merz, who has cast himself as strongly pro-business, has called on the corporate world to make sacrifices to support this.

Jens Günther and his family-owned interiors business Günther-Innenausbau last year won a defence ministry prize for allowing one of their carpenters to serve 15-20 days per year as a reservist. He said it had been a positive experience. “I like to do my part . . . I get a motivated employee who broadens his own horizons a bit and brings things back into the company.”

But he said the company, which has about 20 employees, could not cope with having any more reservists. “If there were two or three, it wouldn’t be possible.”

Carlo Masala, a professor for International Politics at the Bundeswehr University Munich, said concerns about the economic impact of a return to some form of conscription were “overblown”.

Even under a compulsory model, he said, he expected that no more than about 25,000 young people would be called up each year — far less than the more than 200,000 West German conscripts at the height of the cold war.

“My general feeling is that the German business community has realised that they need to be involved in some positive way in the issue of defence,” Masala said. “At the end of the day, they have to accept it.”

Billionaire’s political threats have not stopped the president’s ‘big, beautiful bill’ hurting the electric-car maker’s profits

Elon Musk donated more than $250mn to elect Donald Trump. In return he received a bill that could cost Tesla billions.

Trump’s “big, beautiful bill” puts at risk a crucial source of profit for Tesla by neutering rules that allow the electric-vehicle maker to sell billions of dollars of emissions credits.

The bill deepens a crisis for the company that is already reeling from plunging sales and the loss of EV tax incentives. The legislation provoked a furious response from Musk.

While Trump worked to jam the bill through Congress this week, Musk called it an “abomination” and threatened to target lawmakers who supported it with hostile donations — and even launch his own political party.

Trump retorted that “without subsidies, Elon would probably have to close up shop and head back home to South Africa”. 

Their escalating feud threatens critical parts of Musk’s business empire — and leaves Republican legislators caught in a tussle between the US president and the world’s richest man.

“All family fights are ultimately about money,” said San Francisco-based tech entrepreneur Trevor Traina, who served as ambassador to Austria during Trump’s first term.

“This one seems to be no different . . . Billions in subsidies versus hundreds of millions in primaries.”

In public, Musk has argued against the fiscal bill on the grounds that it will vastly increase the US deficit. But the threat to Tesla is also central to his opposition.

Trump has vowed to kill the US’s three parallel systems of emissions credits, in the name of lower car prices — including one scheme run by the Environmental Protection Agency for greenhouse gas emissions and a second in the state of California based on EV and hybrid car sales.

His “big, beautiful bill” targets a third system, the federal “corporate average fuel economy” (Cafe) standards. The programme penalises automakers whose vehicles fall short of fuel-efficiency targets and rewards those that produce no emissions with clean air credits, which can then be sold on to gas-focused rivals to offset their fines.

Selling credits under Cafe and similar systems in other jurisdictions contributes a substantial and growing proportion of Tesla’s profit.

In the first quarter, Tesla’s reliance on the systems was stark: it would have made a loss if not for credit sales, which rose 35 per cent to $595mn, eclipsing Tesla’s overall $409mn of net income.

Last year, the company reported $2.8bn in revenue from selling regulatory credits worldwide, up from $1.8bn in 2023, and accounting for 39 per cent of its $7.1bn annual net income. It has made more than $11bn since 2015.

The budget bill negates Cafe by setting fines at zero. Tesla worries that traditional automakers will largely stop buying credits as a result, people familiar with the company’s internal debates have said.

“If there’s no penalty for cheating, there’s no reason to buy compliance credits,” said Dan Becker, director of the Safe Climate Transport Campaign at the Center for Biological Diversity. “I’m not sure how costly these [changes] will be compared to the damage that Musk did to Tesla by becoming Trump’s Tweedle Dee and a pariah.”

Tesla does not break down its profits from regulatory credits by region, or between the three American programmes. But a person familiar with the matter said that on average as much as three-quarters came from the US, with the remainder from similar systems in the European Union and Asia.

The effect on Tesla’s bottom line will not be immediate as the company often negotiates multiyear contracts with rivals that will take time to wind down. However, some of those deals included force majeure clauses and language about legislative changes that could see them voided after Trump’s bill, one of the people said.

Tesla will still make money from credits overseas. It recently signed an EU emissions “pooling” arrangement with Stellantis, Ford, Mazda, Subaru and Toyota. UBS analysts said this could ultimately be worth more than €1bn if Tesla monetised its entire long CO₂ position.

In the US, there is little hope of reviving US federal emission credits while Trump is in office. But California has sued over the administration’s efforts to shut down its scheme, in which Tesla has by far the biggest balance of credits.

“There will be some level of credit trading until there is certainty . . . [but] the bottom has dropped out of the market long-term,” said one of the people at Tesla. “Trump has done it so fast and with such ferocity that the entire programmes might just go away.”

Tesla did not respond to a request for comment.

The carmaker has more to lose from Trump’s agenda. Beyond selling cars and credits, it also manufactures its own batteries, runs a network of about 2,600 US EV supercharger stations, builds solar roof tiles and commercial and residential battery storage packs.

Almost all of those businesses will lose significant federal support or tax relief; only energy storage subsidies remain in place. Particularly damaging will be the removal of a $7,500 federal tax credit for certain EV purchases and leases at the end of September.

In response to Musk’s attacks, Trump suggested that the so-called Department of Government Efficiency (Doge), which Musk himself founded, should cancel SpaceX’s and Tesla’s federal contracts.

Tesla has also warned that Trump’s unpredictable tariff policy and trade war with China will disrupt its supply chain, reduce its access to vital materials and make it a target for retribution because of Musk’s connection to the administration.

“This is terrible policy and a devastating blow for Tesla’s bottom line,” said a former Tesla executive. “It’s not just Cafe in a vacuum — it’s everything together: tariffs, the $7,500 consumer credit, manufacturing tax credits, charging credits and solar residential credits.”

“Elon has finally woken up to this, but talk about a day late and a dollar short,” they added.

The billionaire’s power to strike back to defend his empire appears to be limited, even with his huge war chest for future political donations.

Musk left his controversial role at Doge — slashing the federal bureaucracy — in May. Tensions between Musk and the White House over tariffs and the tax bill escalated in June, when he lashed out on X at the president’s signature domestic legislation.

The Trump-Musk relationship has been marked by dramatic swings. Last week, Eric Trump, one of the president’s sons, told the Financial Times that he was “enamoured” by Musk, calling him “one of the great geniuses of our time”.

But Musk amped up his opposition this week as the legislation faced final votes on razor-thin congressional margins.

The billionaire said anyone who voted for “the biggest debt increase in history should hang their head in shame” and “will lose their primary next year if it is the last thing I do on this Earth”.

Thomas Massie, a rare Republican House member who opposed the bill, thanked Musk for his “financial assistance to continue my mission as an independent voice” — after Trump vowed to oust Massie from office.

But few Republicans have rallied to Musk. Fifty of 53 GOP senators voted for the legislation, with a tiebreaking vote from vice-president JD Vance.

Many of Musk’s allies in the business community have also backed the bill, which would extend personal income tax breaks. James Fishback, an investor and former Doge adviser, has created a Super Pac to counter Musk’s political donations.

“Preventing the tax hikes is absolutely essential,” said tech investor Keith Rabois, who donated over $2mn with his husband, Jacob Helberg, to boost Trump’s 2024 campaign. Helberg has been nominated by Trump for a top state department position.

The bill cleared a final congressional vote on Thursday and will land on the desk of a triumphant president.

Traina, the Trump-appointed former ambassador, said: “I have endless respect for Elon, but I think Trump carries the bigger stick here.”

The project would turn Apple into a rival of Amazon, Microsoft and Google

Apple over the past few years considered launching a business renting out its servers to the millions of developers that create apps for the iPhone and Mac, in what would be a hugely ambitious move that would pit it against Amazon, Microsoft and Google.

The idea discussed was for Apple to rent out servers running on Apple’s own chips, said three people involved in the effort. That reflects Apple’s successful development of its own chips, which have given its phones and laptops a big edge over rival devices—and which are also now being used in Apple’s data centers for some artificial intelligence services.

Apple executives think its chips perform so efficiently that developers would end up spending less on its cloud service than they do on major cloud firms now, especially for intensive AI applications. The status of the project is, however, unclear. The biggest proponent of the idea, a cloud executive called Michael Abbott, left the company in 2023. While discussions were still active as of the first half of 2024, it’s not known whether they have continued.

Apple declined to comment.

Even if Apple doesn’t go ahead with the service, the internal discussion demonstrates the strength the company has in semiconductor design, more than other tech companies that have designed their own chips—including Microsoft, Amazon and Google. On Wednesday, The Information reported that Microsoft was scaling back its in-house chip ambitions following delays.

Photos and Music

Apple has tested its chips for servers to process Apple Wallet transactions in the cloud, showing it could save money on internal infrastructure costs, the people said. Apple’s Photos and Apple Music apps have also tried using the chips and saw improved performance in areas like search, said people familiar with the effort.

While Apple has been struggling to keep up in AI, its chips have emerged as a potential bright spot for the company in powering more basic types of AI. It launched its first chip for its iPad and iPhone in 2010 and started adding specialized AI capabilities in 2017. Apple’s chips are efficient at running many types of inference, which means using pre-trained AI models to interpret new information, such as computer vision found in the Vision Pro.

Big tech companies and AI startups are spending tens of billions of dollars annually on Nvidia chips, which were originally designed for graphics processing in gaming, for the intensive process of training large AI models. The launch of ChatGPT in late 2022 has spurred even larger models that require more processing horsepower, mostly using Nvidia chips.

Apple has mostly resisted that push to spend heavily on Nvidia chips for AI training. Instead it has prioritized renting chips from Amazon and Google clouds, spending around $7 billion annually to do so, said people familiar with the company’s cloud spending. Only a small portion of that spending is for AI training, however.

The benefit of using outside clouds for training is that Apple won’t be stuck with a large inventory of Nvidia chips after they’ve trained the models.

But increasingly, as companies seek to make an actual business off the AI models they’ve spent billions training, inference will become a larger portion of AI computing. That’s where Apple thinks it will find an advantage over competitors.

“Apple has been doing AI on their chips for the longest that anyone has been doing it,” said Amit Kumar, CEO of Dragonfruit, a company that uses Apple chips to power a security camera monitoring service for retailers. “While Nvidia was doing gaming, Apple was doing actual AI compute.”

Dragonfruit is one of a growing set of companies turning Apple computers into something like a server. The company buys up Mac minis, a tiny puck-shaped computer without a screen or user interface like a keyboard, and strings them together to create AI machines to analyze camera data at stores. Kumar said that by going with Apple chips, his company gets a massive cost advantage over rivals that use Nvidia chips.

Another company, webAI, offers businesses the ability to efficiently run AI models across any Apple hardware. Apple is also building an open-source framework, MLX, for developers running AI on Apple chips. At the company’s most recent developer conference last month, Apple also opened up its so-called foundation models, allowing developers to run AI on-device within their apps.

Launching a cloud service for developers would help expand Apple’s services revenue, one of Apple’s last remaining areas of growth, at a time when that business is in danger. New laws and court orders threaten Apple’s lucrative App Store fee it collects, and the U.S. Justice Department is challenging the $20 billion default search deal it collects from Google every year.

Instead of having to rely on a large enterprise sales team like a traditional cloud firm, Apple would assign its developer relations team to handle developers who sign up for the service, the involved people said.

Still, launching a cloud service would also be an unusual move for a company that has been so steadfast in its commitment to consumer businesses.

But some large companies have shown the ability to remake themselves. Google, a consumer advertising business for decades, struggled for years to ramp up a cloud-server business but eventually got over the hump. By 2024 Google Cloud accounted for $43.2 billion in sales, more than 12% of Google-parent Alphabet’s total revenue.

Enterprise Traction

Apple has recently gained some traction with some enterprises in new areas. Its Vision Pro headset, for example, has struggled to gain traction among regular consumers—mostly due to its high $3,500 price tag—but has found a foothold in enterprise settings, such as helping airplane technicians repair engines.

During the cloud project’s early years, around 2020, its champion inside Apple was Abbott, a vice president responsible for a number of cloud projects, such as iCloud storage and mail. After his departure, his engineering org was placed under Jeff Robbin, a long-time engineering leader. Adrian Perica, Apple’s vice president of corporate development, who has taken over more of the company’s services business in recent years, would be responsible for running the cloud server business if it ever launched, the people said.

Without Abbott leading the charge, it isn’t clear if the project will proceed, though it still has backers inside the company.

The cloud service idea took root inside Apple with Project ACDC, which stands for Apple chips in data centers. As a first step, Apple last year launched Private Cloud Compute, which uses high-end Mac chips inside Apple data centers to run parts of its new AI system that can’t run on-device, such as more complex requests.

Siri was the first team to try out servers powered by Mac chips for text-to-speech capabilities. The servers provided a performance improvement in accuracy and cost reduction compared to traditional servers with Intel chips, said people involved in the project.

The ACDC team also recruited Photos and Apple Music to try out the system, said people familiar with the effort.

Internally, Apple has referred to its private cloud using its own chips as its own Amazon Web Services, the cloud computing division of Amazon, said people who worked on the project.

Want to keep track of the largest startup funding deals in 2025 with our curated list of $100 million-plus venture deals to U.S.-based companies? Check out The Crunchbase Megadeals Board.

This is a weekly feature that runs down the week’s top 10 announced funding rounds in the U.S. Check out last week’s biggest funding rounds here.

The pace of large U.S. startup financing announcements was somewhat muted in a shortened Fourth of July workweek. However, there was one big exception with xAI reported to have closed on a whopping $10 billion in debt and equity funding. In addition, we saw some good-sized rounds for startups in wealth management, procurement and biotech, among other areas.

1. xAI, $10B, generative AI: Elon Musk’s generative AI startup, xAI, reportedly raised $10 billion in fresh debt and equity financing consisting of $5 billion in strategic equity investment, with the remainder of the capital obtained through term loans and secured notes.

2. Savvy Wealth, $72M, wealth management: New York-based Savvy Wealth, a provider of AI-enabled tools for financial advisers, announced a $72 million Series B round led by Industry Ventures. Founded in 2021, Savvy has raised $106 million to date, per Crunchbase data.

3. Levelpath, $55M, procurement: Levelpath, a provider of AI-enabled procurement tools, said it raised over $55 million in a Series B round led by Battery Ventures. The San Francisco-based company’s platform uses AI agents to autonomously handle procurement tasks for businesses.

4. Terrana Biosciences, $50M, agtech: Cambridge, Massachusetts-based Terrana Biosciences launched this week with $50 million in initial funding from Flagship Pioneering to develop RNA-based agricultural products to deliver protective and enhanced crop traits without altering the plant genome.

5. (tied) Campfire, $35M, enterprise software: Campfire, a provider of enterprise resource planning tools, announced that it raised $35 million in a Series A round led by Accel. The San Francisco-based company said it has also grown revenue 10x over the past two years.

5. (tied) Field Medical, $35M, medtech: Field Medical, a developer of technology used in cardiac ablation, closed a $35 million Series B financing led by BioStar Capital and Cue Growth Partners. The round brings funding to date for the Cardiff-by-the-Sea, California, company to $89 million, per Crunchbase data.

7. Syntis Bio, $33M, therapeutics: Boston-based Syntis Bio, a developer of oral therapies for obesity, diabetes and rare diseases, secured $33 million in a Series A round led by Cerberus Ventures. The company said it also received up to $5 million in grants from the National Institutes of Health.

8. Ambrook, $26M, agriculture software: Ambrook, a provider of accounting and recordkeeping software geared for U.S. farmers and ranchers, announced that it closed on a $26.1 million Series A funding led by Thrive Capital.

9. Emerald AI, $24.5M, energy software: Washington, D.C.-based Emerald AI, a developer of software aimed to help the electric power system keep up with AI’s soaring energy demand, announced its launch along with $24.5 million in seed funding led by Radical Ventures.

10. Gallant Therapeutics, $18M, animal health: San Diego-based Gallant Therapeutics, a biotech startup focused on stem cell therapies for pets, announced the closing of an $18 million Series B financing led by Digitalis Ventures.

While the holiday week may have slowed the pace of funding announcements in the U.S., we did see some very big rounds overseas. Standouts include:

‘The Man Who Would Be King’ Review: A Very Modern Monarch

Mohammed bin Salman, Saudi Arabia’s crown prince and de facto ruler, is attempting to modernize—not to democratize—the desert kingdom.

Karen Elliott House is one lucky lady. The publication of her biography of Mohammed bin Salman, “The Man Who Would Be King,” comes just as the Saudi crown prince and the kingdom he leads move to the center stage of world history. Israel’s stunning victory against Iran and its regional network of proxies and allies has shaken the old Middle East balance of power. MBS, as bin Salman is universally known, will play a critical and perhaps decisive role in shaping the new regional order. As they ponder their next moves, diplomats and policymakers will be turning to Ms. House’s lively and deeply sourced account to better understand Saudi Arabia’s leader. The rest of us, from seasoned Middle East experts to casual readers, will be entertained and instructed by this comprehensive overview of the kingdom and its leader.

Ms. House knows her subject well. As a reporter for The Wall Street Journal, she first began covering Saudi Arabia in the 1970s. Her reporting on the Middle East and the kingdom won a Pulitzer Prize in 1984, and her 2012 book, “On Saudi Arabia,” remains indispensable.

She now turns her attention to the man responsible for upending the Saudi Arabia she once knew. Her astonishment at the sweeping changes he has brought to the country echoes throughout the book, which is as much an account of what MBS has achieved as it is a biography. Ms. House speaks with Saudi women who can’t believe the freedoms their king has brought about, and to business leaders struggling to grasp the scale and audacity of his ambitions. The changes are vast and remain underreported in the West.

The crown prince has also broken with centuries of tradition and royal protocol. No Saudi ruler before him would be seen riding a dune buggy at a tourist attraction, or posing for selfies at a restaurant, or appearing at a Formula E electric-car race wearing—Ms. House tells us—“a navy-colored Barbour jacket over his traditional Saudi thobe, Tom Ford aviator sunglasses, and a pair of Adidas Yeezy Boost 350 trainers.”

Ms. House compares MBS to the 17th-century Russian czar Peter the Great, and the comparison is apt. Both men are best understood as modernizing autocrats, driven to shake up traditional societies and so enable them to withstand the competition and stress of a rapidly changing geopolitical scene. Like Peter, who built St. Petersburg to serve as Russia’s bridge to the West, MBS hopes that his new city—known as Neom—will make Saudi Arabia a dominant force in technological innovation. And like Peter, who asserted political control over the Russian Orthodox church and personally shaved the beards of aristocrats resisting modernization, MBS has ruthlessly imposed his vision on both religious and tribal leaders skeptical of change.

And of course there is another similarity. Americans—who tend to think modernization and democratization go together—may find this hard to grasp, but MBS has no more interest in democracy than Peter the Great did more than three centuries ago, or than Vladimir Putin does today. Ms. House does not neglect to note the continuing limits on freedom of speech under MBS’s rule, and she does not minimize the human cost of the repression that still exists in the kingdom. But she also captures the joy of a younger generation now free to live something much closer to what their Western peers would recognize as a normal life.

“The Man Who Would Be King” was, of course, written before Saudi Arabia’s foremost adversary, Iran, underwent a series of humiliating losses at the hands of the Israeli and U.S. militaries, thus perhaps opening a new chapter in Middle Eastern history. But Ms. House’s reporting on MBS’s views about his kingdom’s strategic challenges remains highly relevant.

In a world with nearly 200 states, Saudi Arabia is unique. As the site of the two holiest pilgrimage shrines for the world’s approximately two billion Muslims and the home of some of the largest oil reserves on the planet, the desert kingdom, with its population of nearly 37 million, has long played a leading part in world affairs. Its alliance with the United States, forged by Franklin Roosevelt and MBS’s grandfather, King Abdulaziz, has been an anchor of what security and peace the Middle East has known. Its long support for Wahhabi Islam has had major consequences across the Islamic world, its influence on oil prices affects economies everywhere, and the decisions it makes about investing its massive resources will help shape the global future.

Yet for all its global influence, there is very little modern about the Kingdom of Saudi Arabia. It is the only country named after its ruling family, the House of Saud, a dynasty that has, with occasional interruptions, held power over much of the kingdom since the 18th century. It only abolished slavery in 1962, and until MBS came to power, only Afghan women under the Taliban faced a more restrictive climate than Saudi women. Civil liberties in a Western sense largely do not exist, and neither the radical Islam that long shaped the kingdom’s political outlook nor the dynastic nature of the Saudi state conform to Western values or liberal ideas. Yet America’s global reach, and the health of what advocates call the “liberal international order,” very much require a close relationship between Washington and Riyadh.

Ms. House skillfully and insightfully depicts the paradox that drives MBS. Saudi society is both supremely self-confident and profoundly insecure. The Saudi population continues to grow. When the population was smaller, the Saudi government could ensure political stability by distributing oil revenue among tribal rulers and city dwellers. But as the population grows, those handouts get more expensive, even as the expanding population and growing prosperity lead to rising domestic consumption of oil, reducing the surplus available for export. As the Saudi population increases and oil revenues stagnate or even shrink, how will the kingdom retain its political stability?

While earlier rulers took small steps to wean the economy from oil, MBS believes the time for half-measures has passed. Saudi Arabia, as MBS grasped years ago, cannot live by oil alone. But to lessen its dependence on oil, the social contract between Saudi citizens and their government has to change. New sources of revenue, like tourism, will have to supplement oil wealth. New industries, like data centers, will need to be welcomed into the kingdom, and new cities to house them will either have to grow from existing ones or, like Neom, be invented.

Will it work? Ms. House is cautious. Comparing his strategy to “playing roulette on a long-spinning wheel,” she says MBS is placing many multibillion-dollar chips on different alternatives to oil. Some will lose, some will win partially, and some, he hopes, will “hit big.” But, she notes, “the ball in this particular roulette wheel is circling so slowly the winning bets won’t be truly paid for decades.” But the MBS she describes is a formidable character bent on imposing his will. Peter the Great faced enormous obstacles building St. Petersburg in the northern marshes, but he persevered. MBS, Ms. House tells us, is equally determined.

We shall see.

Figma listing plans might raise hopes of a rise in IPO activity

When design software company Figma revealed its plans for a stock market listing this week, it felt like a throwback to an earlier era in the tech financing markets.

Chief executive Dylan Field listed the reasons why an initial public offering would be good for his company, which turned to the stock market after an acquisition by larger rival Adobe was blocked by regulators. It was the kind of paean to going public that is rarely heard these days from tech company founders, most of whom have preferred to stay private.

Listing on the New York Stock Exchange, Field said, was a matter of “good corporate hygiene, brand awareness, liquidity, stronger currency and access to capital markets”, as well as giving Figma’s customers a chance to share in the upside.

Field’s accolade to Wall Street will have warmed the hearts of investment bankers hoping to see a recent uptick in IPOs turn into a steady flow, as well as investors in venture capital firms who have been waiting a long time to cash in on the long venture boom. It comes at a time when “exits” — events where venture investments are realised — are starting to pick up.

Through public listings, acquisitions and buyouts, exits by venture reached $67.7bn in the second quarter of this year. That was a big jump from $38.5bn a year before and the strongest showing since the end of 2021.

This has not come a moment too soon. A dearth of exits has been the venture capital industry’s dirty secret, even as artificial intelligence fuels a new investment boom. Since interest rates started to climb in 2021, putting an end to a brief IPO boom, the value of exits has hit a new nadir.

It would be extremely premature, however, to read too much into this year’s rebound. For a start, it comes from an extremely low level. After peaking at $917bn in 2021, the value of exits fell to only $151bn in 2024.

According to hedge fund Coatue, exits fell to only 40 per cent of the value of new VC investments last year — a measure of just how little the industry was returning to its backers, relative to how much capital it is putting to work. With this year’s partial recovery, they have rebounded to roughly match new investments. But a healthy venture investing market, bringing steady returns for investors, would require the value of exits to reach twice the level of new investments, according to Coatue.

The amounts being returned to investors are also tiny relative to the huge value tied up in illiquid private businesses. Estimates of the aggregate value of private unicorns — companies worth more than $1bn — range from $3.5tn-$6tn. 

The large amounts of capital available in the private market continue to give many tech companies little reason to go public. When OpenAI raised $40bn in March, it didn’t just set a new record for the largest private fundraising: it also exceeded the $29.4bn raised in the biggest stock listing of all time, Saudi Aramco’s 2019 IPO.

After the dearth of exits in the last three years, however, investors are ready to grab at any straws of comfort. The strong performance of a handful of recent IPOs, led by cryptocurrency company Circle, have fed hopes of more new listings — though few notable private tech companies are thought to be ready to go public.

Another encouraging sign has been the willingness of some companies that raised money at the peak of the 2021 venture boom to bite the bullet and accept that they are worth far less today. When online bank Chime went public last month, it priced its shares at $27 each, a large discount to the $69 a share in its last private round in 2021. As more “down-round IPOs” like this occur, venture investors will hope that the stigma normally associated with admitting to a tumbling valuation will pass. 

Meanwhile, some venture capital firms have been trying to co-opt private equity techniques to fuel more deals. As the Financial Times reported this week, several firms have been working on corporate “roll-ups” — buying a number of companies in the same industry, then combining them into a single, larger business and cutting overheads. With less leverage and a friendly venture capital face, the backers hope to persuade tech founders that this represents a solid strategic outcome, rather than the kind of short-term financial engineering associated with private equity.

All of this should bring a steady, if slow, recovery in the real returns to investors. But even as the AI investment boom roars, the venture industry is still heavily reliant on profits that only exist on paper.