Silicon Valley startups are continuing to negotiate deals with Saudi Arabia and take its capital through its partner SoftBank Group Corp. , amid the controversy over the killing of journalist Jamal Khashoggi that has clouded the kingdom’s role as a global technology investor.
Two startups— View Inc., which makes light-adjustable glass, and Zume Inc., which uses robots to make pizza—disclosed investments over the past week totaling a combined $1.5 billion from SoftBank’s Saudi-backed Vision Fund.
Late last month, Katerra Inc., an innovator in property construction, reached a tentative deal with the Saudi government to build up to 50,000 units of housing annually for the kingdom. That followed a $1 billion funding round led by the Vision Fund early this year that valued the Menlo Park, Calif., company at more than $3 billion.
Meanwhile, negotiations continued in recent weeks for a deal in which Tokyo-based SoftBank would invest $15 billion to $20 billion to buy a majority stake in WeWork Cos. likely with Vision Fund money, according to people familiar with the discussions. A WeWork spokeswoman declined to comment.
The deals and negotiations indicate at least some in Silicon Valley continue to do business with Saudi Arabia and the SoftBank fund that it backs in the aftermath of Mr. Khashoggi’s grisly killing by Saudi agents at the kingdom’s consulate in Istanbul on Oct. 2.
Turkish allegations of Saudi involvement in the killing early last month prompted a number of companies, including some in Silicon Valley backed by SoftBank, to cancel attendance at an October conference in Riyadh sponsored by the Saudi sovereign-wealth fund.
Endeavor LLC, Hollywood’s biggest talent agency, has been trying to end its business with Saudi Arabia, The Wall Street Journal reported last month. Richard Branson’s Virgin Group and multiple Washington lobbying firms have said they are canceling or suspending deals with the Saudi government. Republican and Democratic lawmakers also have called for curbing ties with the kingdom.
Other companies, including many in the energy industry, have stood by Saudi Arabia through the controversy.
Saudi Arabia, which initially said Mr. Khashoggi left the consulate alive, has since acknowledged he was killed inside. It says it is investigating and denies any link to its crown prince, Mohammed Bin Salman.
Masayoshi Son, SoftBank’s chief executive, said at an earnings conference Monday he wasn’t aware of any companies that had refused SoftBank money because of ties to Saudi Arabia. He denounced Mr. Khashoggi’s killing and said “there may be a little impact” in SoftBank’s ability to invest in companies in the future, but that the Japanese conglomerate will continue to work with the kingdom.
“We have an obligation to the people of Saudi Arabia to help them manage their financial resources to diversify their economy,” he said.
The stakes are high in Silicon Valley. Saudi Arabia has become the largest funder of U.S. startups in recent years as it works to diversify its economy by steering a big chunk of its Public Investment Fund toward technology. The kingdom has committed more than $12 billion to U.S. startups since mid-2016, according to a Wall Street Journal analysis, largely through its $45 billion commitment to SoftBank’s $92 billion Vision Fund. SoftBank has autonomy over most of the fund’s investment decisions.
Within Silicon Valley—a place where chief executives often talk openly about politics and startup founders often say they are out to make the world a better place—the response to the Khashoggi killing and the international backlash of a huge benefactor has been relatively muted. Entrepreneurs and venture capitalists have generally declined to talk publicly about Saudi money in recent weeks.
U.S. Rep. Ro Khanna, a Democrat who represents much of Silicon Valley, says startups should reject Saudi money, particularly given Saudi involvement in the war in Yemen.
Companies financed by Saudis or Saudi-backed funds “would be complicit in taking money from a regime that is engaged in some of the most brutal human rights violations in the world,” he said.
View, based in Milpitas, Calif., and Zume, in nearby Mountain View, declined to discuss Saudi involvement in their funding. Both companies had been in talks with the Vision Fund before Mr. Khashoggi’s death.
View, which makes windows that automatically darken and lighten, announced on Friday that it had raised $1.1 billion from the Vision Fund. Zume, which uses robots to cook pizza in delivery vans, raised $375 million from the fund, according to a person familiar with the matter. The company announced the funding but didn’t reveal its source publicly.
Katerra is a three-year-old company that is trying to make construction more efficient by putting architects, engineers, contractors and builders in the same company, and use an assembly line-like manufacturing process for building parts. Its chairman, Michael Marks, signed a memorandum of understanding in Riyadh nearly two weeks ago with the Saudi government as part of a competition with other companies to build housing for a Saudi public agency.
If the Saudi deal is ultimately completed, it would be far larger than anything Katerra has signed to date, involving construction of as many as eight factories in Saudi Arabia along with the new housing.
—Katie Roof contributed to this article.
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