Headline news that Saudi Arabia will join forces with Japan’s SoftBank in launching a $100 billion venture capital fund is energizing the startup scene. We believe the enthusiasm is misplaced. Most early-stage companies cannot—or should not—digest the sort of money that sovereign wealth funds can put into play. This initiative, for instance, amounts to 30-to-35 times the total capital allocated to all cybersecurity deals in 2015. And cybersecurity is one of the hottest tech segments in the market. In that marquee style, Riyadh is demonstrating its commitment to reshaping its economy through knowledge transfer. The statement is admirable. But entrepreneurs worldwide may lament the repositioning of the plan into a downsized portfolio of pre-IPO deals and secondary-market transactions. ■
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