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Tech investors and founders were loud and proud about their Gulf money in 2023, after keeping it quiet in the wake of Jamal Khashoggi’s murder.

How do you know when a venture capitalist or founder is in Saudi Arabia looking to get a piece of the country’s piles of petro cash for their latest funds or startups?

A telltale sign is the procession of Mercedes-Benz cars and SUVs weaving through the streets of Riyadh from the city’s Four Seasons Hotel to grand royal meeting rooms where local sovereign wealth fund managers are waiting. Zafer Younis is often inside a vehicle in one of those caravans, accompanying guests from the West. Since 2019, his firm—Silicon Valley Venture and Innovation—has helped broker introductions for U.S. venture capitalists to wealthy investors in the Middle East, packing their days with dozens of pitch meetings in Riyadh, Dubai and Abu Dhabi.

Younis often has to remind his clients, whom he declined to identify on the record, that their Silicon Valley swagger might not translate well in the Middle East. “Humbleness is super important” in Middle Eastern culture, said Younis, who has even written a guide for venture capitalists that want to raise money in the region.

Currently, business is booming for Younis. The end of the era of cheap capital has led to one of the grimmest periods for fundraising on record for Western startups and VC firms at a time when a boom in artificial intelligence startups is prompting a voracious appetite for cash. That has prompted many founders and investors from the U.S. to go abroad with their proverbial hats in their hands, especially to regions where high oil prices have swelled the size of sovereign wealth funds. Over 90 investors have asked Younis for help organizing road shows with investors in the Middle East last year, a greater number than ever before.

Silicon Valley’s romance with the Middle East is back with a vengeance. For a time, the two seemed inseparable. In 2016, Uber scored a cool $3.5 billion from Saudi Arabia’s Public Investment Fund, one of the largest sovereign wealth funds in the world, while SoftBank raised $60 million of its $100 billion Vision Fund in 2017 from PIF and Mubadala Investment Co., one of the United Arab Emirates’ sovereign wealth funds. Tech leaders like BlackRock CEO Larry Fink and Virgin Group founder Richard Branson made pilgrimages to the Future Investment Initiative—a conference in Riyadh sometimes called “Davos in the Desert”—to rub elbows with the Saudi royal family.

But the open affair with Saudi money changed suddenly in 2018 with the grisly murder and dismemberment of Jamal Khashoggi, a dissident Saudi journalist who wrote for The Washington Post. Western intelligence services determined that Mohammed bin Salman, Saudi Arabia’s crown prince and prime minister, likely ordered the murder; he denied having done so but ultimately accepted responsibility for it.

The news upended the growing financial relationship between Silicon Valley and the Gulf: Western business leaders canceled their trips to that year’s FII, Branson called off talks for a $1 billion investment from Saudi Arabia in his space adventures, and several prominent tech leaders, including OpenAI’s Sam Altman, stepped down from the board of Neom, the futuristic city MBS—the initials often used to refer to Prince Mohammed—is building in northern Saudi Arabia.

Silicon Valley didn’t entirely stop taking Saudi Arabia’s money: Then-startups including WeWork and Slack happily accepted hundreds of millions of dollars from the Vision Fund, although the recipients didn’t advertise their connections to Saudi Arabia.

But last year, Silicon Valley stopped trying to keep its thirst for Middle Eastern money on the down low. Social Capital’s Chamath Palihapitiya was spotted in the region and suggested Dubai as a potential location for the All-In Summit, a tech conference put on by the “All-In” podcast he co-hosts. Altman was in the Gulf last year fundraising for a new AI chip startup. And Ben Horowitz—whose firm, Andreessen Horowitz, has raised money from Sanabil Investments—last March appeared at a version of the FII conference in Miami, where he lavished praise on Prince Mohammed in almost profuse terms.

“Saudi has a founder,” Horowitz said at the event. “You don’t call him a founder, you call him His Royal Highness.”

For their part, investors in the Persian Gulf are welcoming them back—with caveats. Middle Eastern investors are still eager to diversify their economies away from oil, but they say they’re done with tech firms treating them like piggy banks. Before they’re willing to write checks, many of them are pressuring venture capitalists and startups to put boots on the ground in the region or to localize their products to foster local tech ecosystems.

“Gone are the days of easy, dumb Gulf money,” said Fares Ghandour, a partner at Wamda Capital, a regional venture firm focused on investing in the Middle East and North Africa.

It’s not hard to see why they’re flexing their muscles. According to a new report from the financial data firm PitchBook and the National Venture Capital Association, startups raised $170.6 billion in 2023 from U.S. venture capitalists, down nearly 30% from $242.2 billion in 2022. Likewise, venture firms are raising less money from pension funds, university endowments and other limited partners: $67 billion in 2023, down around 61% from $173 billion in 2022, according to the same report.

In contrast, the Middle East’s megafunds gushed money last year, thanks in large part to sustained high oil prices. Saudi Arabia’s PIF, for example, was the lead state-owned investor, deploying $31.6 billion in 2023 across 49 deals, up nearly 33% from the prior year, according to a report from research firm Global SWF. Along with PIF, Abu Dhabi’s three sovereign wealth funds—Abu Dhabi Investment Authority, Mubadala and Abu Dhabi Development Holding Co.—and the Qatar Investment Authority also earned spots in the ranks of the top 10 most active dealmakers globally, according to the same report.

Much of the investing by those funds is in areas like mining, aircraft leasing and manufacturing. But one of the biggest Saudi deals was the nearly $5 billion acquisition last July of U.S. game maker Scopely by a games division of PIF.

It’s tougher to say how much money from the Middle East is going into U.S. venture funds. Venture firms are usually tight-lipped about who their LPs are, much less how much money they’re getting from each of them. And after the Khashoggi killing, they clammed up even more about whether and how many of their LPs were Middle Eastern.

It was noteworthy, therefore, when the venture arm of the PIF decided to break the status quo by releasing a list of nearly 40 U.S. VC funds it is a limited partner in, including Andreessen Horowitz, Coatue Management, Founders Fund, Dragoneer Investment Group and Greenoaks Capital Partners.

To human rights advocates, the acceptance of Saudi and UAE state funds back into the fold by tech startups and VC firms is disheartening. Both countries have aggressively cracked down on freedom of speech, arresting—and in Saudi Arabia’s case, sometimes killing—dissidents.

“Any investment coming from Saudi Arabia’s [PIF] is effectively a business deal with the murderer Mohammed bin Salman,” said Sarah Leah Whitson, the executive director of nonprofit Democracy for the Arab World Now. “But, you know, clearly American businesses are into it.”

A spokesperson for the Saudi embassy in Washington didn’t have a comment.

As one founder joked, the days of investors being ashamed of or reticent about taking Gulf money are over. “Once Marc Andreessen took their money—it’s fine,” the founder said.

Spokespeople for Andreessen Horowitz didn’t respond to requests for comment.

Tech leaders jetting to the Middle East for money are finding it’s not the same region many of them left back in 2018.

At that time, the tech scene in the countries of the Gulf Cooperation Council—an economic and political union consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE—was embryonic, with only a few firms writing checks to startups. Since then, the UAE and Saudi Arabia especially have significantly stepped up their efforts to strengthen their local tech ecosystems by creating more tech-focused investment funds, establishing more financial regulations and publishing increasingly aggressive goals for their tech economies.

In Saudi Arabia, two investment firms—Saudi Venture Capital Co. and Jada Fund of Funds—launched in 2018, while the Neom Investment Fund launched last year. Similarly, the UAE launched a $30 billion climate fund with BlackRock, Brookfield Asset Management and TPG late last year. And recently, the country passed a tax law that increases the number of business people who need to be audited,, a move meant to appeal to foreign investors, says Obediah Ayton, director of Dhabi Hold Co., an investment management firm in Abu Dhabi.

“Everybody in the country—for the first time ever in its history—is going to have to submit their books,” he said, saying it will drive sketchy businesspeople elsewhere. “It means that America is going to trust us more and Europe’s going to trust us more.”

In Saudi Arabia, local startups raised a record $1.38 billion in capital last year, up 33% from the $987 million they raised in 2022, according to estimates by financial analytics firm Magnitt. Some of that growth stemmed from funding deals for two Saudi-based fintechs that hit unicorn status last year, Tabby and Tamara.

With signs of life in the startup ecosystems of the Middle East, local sources of money are becoming more assertive about their roles in building them up. In some cases, that means sovereign wealth funds are beginning to cut out the intermediaries. As The Information has previously reported, funds from Qatar, Saudi Arabia and the UAE have told investors they have a new strategic mandate to make more investments directly into startups instead of backing Western VC funds, according to two investors who spoke to these Middle Eastern sovereign wealth funds.

In cases where sovereign wealth funds are still putting money into Western VC funds, those deals are increasingly coming with strings attached to ensure a bigger local impact. For example, Saudi Venture Capital on some deals will require venture firms to invest 1.2 times the amount of money SVC has committed to those firms in Saudi startups, according to two investors who spoke to the firms. The definition of what qualifies as a Saudi startup under SVC’s rules is a bit squishy, though, according to one of those investors: Startups that simply do business in Saudi Arabia can in some cases qualify.

It’s not an uncommon practice among state-controlled investors: Poland’s state fund, PFR Ventures, requires recipients of certain funds to put two times the amount fundraised into Polish companies.

How exactly then does a Western tech investor or founder get a leg up on others when raising money from Gulf investors?

“You have to be serious about deploying staff and your level of expertise” in the region, Ayton said bluntly.

For Kendrick Nguyen, CEO of New York–based private investing startup Republic, that has involved spending the last 12 months proving his dedication to the region. Nearly two months of that has consisted of visits to Doha, Riyadh and Abu Dhabi to build relationships with investors and other startups. This year, he plans to do even more traveling to the region.

Nguyen’s biggest show of commitment so far: Republic plans to establish an international headquarters in the Middle East in early 2024, which hasn’t been previously reported. It is currently choosing between Saudi Arabia and Abu Dhabi as the location for the office, Nguyen said. The company will also create a satellite office in the city it doesn’t select as its international headquarters, according to Nguyen.

Nguyen chooses his words carefully when describing his motivations for establishing a bricks-and-mortar presence in the region. The primary goal, he says, is to help Republic more effectively offer its services to the countries in the Gulf Cooperation Council. At the same time, he acknowledges the move will also likely help him build relationships with sovereign wealth funds in the Gulf.

“Setting up an office just to raise or eventually raise would be too artificial. But if paired with actual business or simply [wanting to have] real business relationships in the region, the office helps,” Nguyen said.

His is not the only startup setting up shop in the region. Revolut, a global neobank headquartered in London, has 100 engineers working in the UAE whom it relocated from Ukraine and Russia due to the war there. It's also hiring a team to work on launching its services in the region this year, a person with knowledge of the company’s plans said. The business, which enables cross-border money transfer, could take advantage of the Middle East’s development as a global hot spot for dealmakers and businesses.

One Western investment firm, 500 Global, has taken its commitment to the region to another level. The firm, which started in Silicon Valley, has been investing in the Middle East since 2011. And Khashoggi’s killing hardly spooked it from the region, unlike other Western investors: 500 Global opened an office in Riyadh in 2018, and a month after his death the firm partnered with the nonprofit Misk Foundation, founded by Prince Mohammed, to launch an accelerator aimed at startups in the Middle East and North Africa. In 2021, the firm’s chief operating officer and managing partner, Courtney Powell, went even further when she moved her entire family to Saudi Arabia.

Her relocation was inspired by 500 Global’s own economic research, which showed that Saudi Arabia is one of the fastest-growing economies outside the U.S. and China, she says. “I just viewed it as an incredible opportunity and really a once-in-a-lifetime opportunity to see a massive economy transform,” she added.

The move could have been complicated for Powell as a female investor in Saudi Arabia. While there has been progress on women’s rights in the country—the nation began allowing women to drive in 2018, for example—there is still a male guardianship system in place that requires a woman to get her guardian’s approval to marry. Prince Mohammed’s regime has also imprisoned prominent activists who advocated for increased women’s rights.

But Powell says she’s been comfortable working as a woman in Riyadh. “Over 30% of our portfolio in the Middle East is female founded or co-founded, which is higher than our portfolio within the U.S.,” she said. “I think the old perceptions of Saudi continue to change and you see that women and youth are really empowered here and entrepreneurship has massive support.”

Her firm has been rewarded for its loyalty. In early 2021, 500 Global co-launched a startup accelerator with Sanabil.

Still, not every tech investor believes it’s necessary to sign a local lease in Riyadh or Abu Dhabi to win the financial support of Gulf fund managers.

Some of them enlist intermediaries that help build their relationships in other ways. Several investors who do business in the Middle East say they’ve had conversations with one such intermediary who represents Andreessen Horowitz in the region. Other U.S. venture firms have relied on local representatives to escort portfolio companies, particularly later-stage startups, to sovereign wealth funds and family offices.

For the U.S. investors, it can help their startups score government contracts or get follow-on funding from investors in the Middle East. Meanwhile, the visits build trust between U.S. venture firms and Gulf investors by giving the latter direct access to star startups, one Arab investor said.

Along those lines, Arjun Sethi of Tribe Capital, a venture firm based in San Francisco, said he was not impressed with investors and founders who merely promise to open offices or hire teams in the Middle East, describing those as potentially hollow gestures. Sethi has long been public about his ties to the region, traveling regularly to visit his limited partners and portfolio companies in the Gulf once every two months, but Tribe does not have an office there.

Sethi says he sometimes runs into fund managers in the region, who tell him it’s a relief to see him in the flesh. “Trust is the currency that is earned and takes time for a lot of folks,” said Sethi. “You can’t just set up an office and say, ‘I’ve arrived and I’m going to be successful now.’”

While the memory of Khashoggi’s murder has faded for some, other political tensions have awakened criticism of Silicon Valley’s Middle East relationships.

On October 9, following Hamas’ massacre of about 1,200 people in Israel, venture capitalist Keith Rabois retweeted a post that inaccurately said Saudi Arabia would cease all negotiations to normalize relations with Israel. “This is why it is immoral to raise money from Saudi Arabia,” said Rabois, then a partner at Founders Fund.

Saudi officials subsequently clarified the efforts are on hold until Palestine and Israel can work out a two-state solution. Rabois’ comment was a bit awkward since Founders Fund was among the firms Sanabil listed on its website last year as recipients of its funding. Rabois recently left Founders Fund for Khosla Ventures.

The Israel-Hamas war also cast a spotlight on Qatar for tech investors. In late 2022, the country’s $475 billion sovereign wealth fund signaled that it wanted to be a bigger tech investor when it backed Elon Musk’s Twitter acquisition. In February, Qatar will host the first-ever Web Summit tech conference in the region, a glitzy affair expected to feature beachside afterparties and celebrity headliners like Formula E World Champion Jean-Éric Vergne. But after the war intensified in October, a number of scheduled attendees cut ties with the conference, with VC firms like Coatue Management canceling their speaking gigs.

Some investors and founders say they’re not comfortable doing business with Saudi Arabian funds, but they have no such qualms about taking capital from other countries in the region, such as the UAE.

Last May, Delian Asparouhov—co-founder of Varda Space Industries, a startup that manufactures pharmaceuticals in space—was about to leave for Dubai to meet with potential partners for the company. At the time, he told The Information he was appalled by Saudi Arabia’s abuses against its LGBTQ population.

“My position, if any, is that the UAE is an acceptable capital partner,” he said.

Some human rights advocates, like Whitson of Democracy for the Arab World Now, push back against that argument, saying there’s little difference in the human rights records of the UAE and Saudi Arabia. Freedom House, a nonprofit that grades countries around the world in terms of their repressiveness, assigned a score of 8 out of 100 to Saudi Arabia last year, 18 to the UAE and 25 to Qatar.

Powell of 500 Global says her firm believes supporting entrepreneurs abroad can lead to positive changes in their countries. “If you’re talking about wanting to see advancement in terms of an economy or society, we can think of no better way to do that than to invest in incredible founders who are going to create jobs and economic impact,” she said.

Sheridan Clayborne—co-founder of Lendtable, a San Francisco–based startup that gives people cash advances to help them receive 401(k) matches from their employers—had a similarly positive experience in Saudi Arabia. Last month, he visited the country on a trip that combined business with vacation, including a visit to the desert city of AlUla with a group that included members of Gulf royal families and regional institutional investors.

As he stargazed in the desert, an hour from the fast-growing city, Clayborne listened to his Arab companions talk about all of the infrastructure and projects that didn’t exist five years ago and all the futuristic plans for the coming decade.

“These are some of the people who are actually making those changes,” he remembered thinking. “There’s just such a big shift in the country—you get to hear how different this all could be in the next five years.”