US Compels #Saudi Fund to Exit AI Chip Startup Backed by Altman - Bloomberg

US Compels Saudi Fund to Exit AI Chip Startup Backed by Altman - Bloomberg

The Biden administration has forced a Saudi Aramco venture capital firm to sell its shares in a Silicon Valley AI chip startup backed by OpenAI co-founder Sam Altman, an exit that could have broader implications for the Middle Eastern country’s growing investments in US technology.

Prosperity7, a lead investor in a funding round that raised $25 million for Rain AI in 2022, sold its shares in the startup after a review by the Committee on Foreign Investment in the United States, people familiar with the matter said. The agency, the primary US watchdog for deals with national security implications, instructed the Saudi fund to unwind that deal sometime over the past year, the people said, asking to remain unidentified because the information is private.

The US is heightening scrutiny over the activity of Middle Eastern wealth funds, part of a growing resistance toward entities regarded as having close ties with China. CFIUS is reviewing several multibillion-dollar deals this year on concerns they could pose national security risks, Bloomberg News has reported.

Rain AI, partly financed by Altman, is a startup that designs AI chips inspired by the way the brain works. Prosperity7 sold its stake in the firm to Silicon Valley investment firm Grep VC, according to data firm PitchBook. Altman, Rain, Prosperity7 and Grep VC did not reply to requests for comment. CFIUS said in an emailed statement it couldn’t comment on transactions it’s reviewing but that it’s “committed to taking all necessary actions within its authority to safeguard U.S. national security.”