Despite Uber’s poor showing, Saudi Arabia’s appetite for investing in U.S. startups shows no signs of waning with the country now adding a kitchen rental startup to its portfolio. This is despite the negative press the country received following the murder of Washington Post columnist and U.S. resident Jamal Khashoggi.
According to The Wall Street Journal, the Public Investment Fund (PIF) invested $400 million in CloudKitchens in January. This makes the kitchen rental startup, which was formed by Uber founder Travis Kalanick, the earliest beneficiary of the cash-flush fund following the Khashoggi killing.
The startup is currently valued at around $5 billion. PIF’s investment in CloudKitchens now exceeds what Kalanick himself has put in ($300 million).
This is not the first investment Saudi Arabia’s sovereign wealth fund has invested in a firm co-founded by Kalanick. In June 2016, PIF invested $3.5 billion in Uber giving the sovereign wealth fund a stake of over 70 million shares.
With Uber having reported a quarterly loss of over $1 billion earlier this month and with the lock-up period having expired, the stock has now lost around 40% of its value. At the current stock price of $26.92, PIF’s stake in Uber is worth approximately $1.96 billion.
Within three years, PIF’s investment in Uber has fallen by over $1.5 billion. So why is the sovereign wealth fund still throwing money at Kalanick’s ventures? It can be argued that PIF’s confidence is due to Kalanick not being at the helm of Uber, which means he isn’t responsible for the problems facing the company. Subsequently, the Saudis do not blame him for their investment being in the red and are willing to take another chance.
What is interesting about the startup that mainly lets kitchens to restaurants that prepare food for delivery services is that an agreement to get funding from the PIF was reached just three months following the death of Khashoggi.
This was at the height of an international campaign to boycott Saudi Arabia. Khashoggi’s death provoked outrage all over the world and even led to American businesses snubbing the inaugural Saudi economic summit, branded ‘Davos in the Desert’, in October 2018.
Among those who snubbed the Saudi economic summit was current Uber CEO Dara Khosrowshahi. This year, all seemed to have been forgotten as senior U.S. government officials, Wall Street financiers and global industrialists were among the attendees at the Saudi conference.
Silicon Valley has also shown a willingness to turn a blind eye whenever its interests are threatened. Netflix founder and CEO Reed Hastings, for instance, recently defended a decision to pull content that criticized Saudi Crown Prince Mohammed bin Salman.
Therefore, don’t expect Kalanick’s CloudKitchens to cook up a storm for accepting money from Saudi Arabia.