Saudi venture capital firm ordered to divest from Altman AI chip project

  • The US government has forced a Saudi venture capital firm to sell its shares in an Altman-backed startup
  • The startup in question is Rain AI, which designs bio-inspired neuromorphic chips
  • This comes as the US tightens security controls on Middle Eastern investments
Saudi AI

The Biden administration has ordered a Saudi Aramco venture capital firm, Prosperity7, to divest its shares in a Silicon Valley AI chip startup, Rain AI, which had received backing from OpenAI co-founder Sam Altman. 

This move, part of a broader scrutiny of Middle Eastern investments in US technology, especially those with potential ties to China, was overseen by the Committee on Foreign Investment in the United States (CFIUS). 

Heightened US investment scrutiny comes amidst growing concerns over national security risks posed by funding AI projects overseas. The US has recently intensified its efforts to counter China’s technological influence, particularly in the semiconductor industry, which Nvidia dominates. 

Rain AI, partially financed by Altman, is engaged in designing neuromorphic bio-inspired AI chips modeled on neurons. They’ve been around since mid-to-late 2022 when it raised $25 million in series-A funding.

The recent funding venture, code-named Tigris, involved Altman traveling to the Middle East before the OpenAI governance debacle that saw him being temporarily fired. He engaged in discussions with various investment groups, including SoftBank, Saudi Arabia’s Public Investment Fund, and Mubadala Investment Company. 

Following pressure from the US government, Prosperity7, which participated in that 2022 funding round, sold its stake to Grep VC, a Silicon Valley investment firm.

Alongside this, Altman was also exploring funding for another AI hardware project in collaboration with Jony Ive, former design chief at Apple. 

The kinds of neuromorphic chips Rain AI develops are ultra-low power and might possibly enable a new era in ultra-energy-efficient AI chips. They’re vital for creating autonomous AI technologies that roam and interact with the world. 

Altman’s most recent fundraising effort coincided with a critical phase for OpenAI, as the company finalized a deal to let employees sell shares at a valuation of $86 billion.

While Altman encouraged investors to engage with his new ventures, OpenAI announced his removal as CEO, later reinstating him amid employee pressures on the board. 

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