An article by Sertan Ayçiçek
Sovereign wealth funds invested $66 billion in AI in 2025, outpacing traditional venture capital. How state-backed capital is reshaping startup funding and what private companies need to access it.
Global sovereign wealth funds invested $66 billion in artificial intelligence and digitalisation in 2025. Total assets under management reached $15 trillion, a 14 percent increase year-on-year. These state-backed investment vehicles have abandoned their traditional role as passive stewards of national reserves. They now rank among the most aggressive backers of early-stage technology companies on the planet.
I have observed this change first-hand through my work with the Sovereign Investors Council and in leading IKAR Holdings across 14 sectors. Sovereign fund managers no longer ask about yield curves and dividend stability. They want to know about AI infrastructure, semiconductor supply chains, and which founders can build category-defining companies.
The Gulf Leads a Global Realignment
Gulf Cooperation Council funds control approximately 40 percent of global sovereign wealth assets, representing six of the ten largest funds worldwide. In 2025, these funds deployed $126 billion in new investments, a historical maximum.
Abu Dhabi’s Mubadala Investment Company grew its assets under management to $330 billion in 2024, delivering a five-year return of 10.1 percent. Its AI-focused subsidiary MGX, launched in March 2024, participated in three of the largest AI funding rounds in history: OpenAI’s $6.6 billion raise, Databricks’ $10 billion round, and a $30 billion data centre partnership with BlackRock and Microsoft.
Saudi Arabia’s Public Investment Fund grew from $160 billion in 2016 to $941 billion by the end of 2024, a compound annual growth rate of 22 percent. PIF created 103 new portfolio companies and contributed to 1.1 million jobs. In 2025, PIF formed Humain, its AI-focused operating subsidiary targeting infrastructure, cloud computing, data management, and applications.
Qatar Investment Authority established Qai, its national AI firm, in late 2025. QIA holds stakes in Anthropic and launched Qatar’s first venture capital fund of funds programme.
Sovereign Capital Matters More Than Ever
Gulf states recognise their oil wealth has a finite horizon. Sovereign funds must build positions in industries that will define the post-hydrocarbon economy.
Sovereign wealth funds (SWFs) participated in AI venture transactions totalling $46 billion in the first nine months of 2025. Total venture capital investment in generative AI reached $87 billion for the first 11 months of 2025, nearly double the $52.5 billion from 2024.
Average late-stage AI deal size reached $1.2 billion in 2025, up from $629 million the previous year. SoftBank Group’s $40 billion investment in OpenAI in March was the largest AI transaction ever recorded. Mistral AI raised $2 billion at a $12 billion valuation. Anthropic completed a $13 billion round at a valuation exceeding $180 billion, reflecting the AI investment paradox that has gripped global markets.
Washington Joins the Race
In August 2025, the Trump administration converted federal grants into a 10 percent equity stake in Intel Corporation, the only American company manufacturing advanced chips domestically. National Economic Council Director Kevin Hassett described the investment as a “down payment on a sovereign wealth fund.”
The Department of Defense took a potential 15 percent stake in MP Materials, the only rare earth producer in the country, attracting $1 billion in private co-investment from JPMorgan Chase and Goldman Sachs. The administration’s Stargate Project, a $500 billion joint venture with OpenAI, SoftBank, and Oracle, includes MGX as a key partner contributing approximately $7 billion. The project’s ambitions are now being tested by China’s DeepSeek and its challenge to US tech giants.
Beijing launched a Rmb60.1 billion ($8.4 billion) national AI fund in early 2025, backed by the National Integrated Circuit Industry Investment Fund. The United Kingdom established its Sovereign AI Unit with £500 million in initial capital, aiming to renew its strategic investment in global AI leadership.
What This Means for Private Companies
Sovereign wealth funds offer time horizons extending across generations rather than fund cycles. They commit patient capital without quarterly exit pressure. They carry the implicit endorsement of nation states.
The Invesco Global Sovereign Asset Management Study for 2025, surveying 83 sovereign wealth funds and 58 central banks managing $27 trillion, found the top three asset classes for increased allocation are infrastructure, fixed income, and private equity. Direct strategic investments represent 10 percent of average sovereign fund portfolios.
At IKAR Holdings, our presence across aviation, technology, energy, education, health, sports, and tourism positions us to engage with sovereign partners on multiple fronts. Companies attracting sovereign interest share common characteristics: robust governance frameworks, scalable business models, clear paths to market leadership, and alignment with national development priorities.
The Decade Ahead
Global SWF assets are forecast to reach $18 trillion by 2030. Capital will concentrate in artificial intelligence, clean energy, semiconductor manufacturing, digital infrastructure, and biotechnology. The semiconductor industry, in particular, has seen unprecedented valuation growth, with NVIDIA’s market capitalization briefly surpassing Germany’s GDP late last year.
In October 2025, quantum computing firms including IonQ, Rigetti Computing, and D-Wave Quantum entered discussions to exchange equity stakes for federal funding. The US government could become a long-term venture partner for researcher-founders developing technology years from commercial viability.
Winston Ma, Executive Director of the Global Public Investment Forum and author of The Hunt for Unicorns, has described sovereign wealth funds as the “unicorn-makers behind the scenes.” The distinction between state capital and private venture capital has blurred. The funds are accessible, but founders seeking their capital need strong governance, scalable models, and the patience to align with national development priorities that operate on decade-long timescales.
Sovereign wealth funds (SWFs) are state-owned investment vehicles that manage a country’s financial assets, such as surplus revenues, foreign exchange reserves, or proceeds from natural resources. Unlike traditional venture capital (VC) firms, which are privately owned and focus on high-growth, high-risk investments with shorter time horizons, SWFs prioritise long-term growth and strategic national objectives. While VC firms seek rapid returns and exits, SWFs often invest with a generational perspective, supporting industries that align with national priorities, such as technology, infrastructure, and energy transition.
Sovereign wealth funds are shifting their focus to technology and artificial intelligence (AI) to diversify their economies, reduce dependence on finite resources like oil, and secure a competitive edge in the post-hydrocarbon economy. These investments align with national strategies to dominate emerging industries, build domestic innovation ecosystems, and ensure long-term economic resilience. For example, Gulf states are investing heavily in AI infrastructure, semiconductor supply chains, and data centres to position themselves as global leaders in these sectors.
Sovereign wealth funds’ investments in foreign technology companies can create geopolitical tensions, particularly when funds from rival nations acquire stakes in critical industries. Concerns include potential espionage, unauthorised access to sensitive data, or influence over strategic sectors like defence, telecommunications, and AI. Western governments, for instance, have scrutinised investments from funds linked to China and the Gulf states, leading to regulatory barriers or outright bans on certain transactions. These risks highlight the dual role of SWFs as both financial tools and instruments of national strategy.
Sovereign wealth funds can inflate startup valuations by injecting large sums of capital into high-profile deals, particularly in sectors like AI and biotechnology. Their participation often signals long-term confidence, attracting additional private investment and accelerating growth. However, this can also create distortions, such as overvaluation or a reliance on state-backed capital rather than sustainable business models. Startups may prioritise alignment with national priorities over commercial viability, potentially limiting innovation or market-driven solutions.
Critics argue that sovereign wealth funds can distort private markets by prioritising strategic objectives over financial returns, leading to inefficiencies or misallocation of capital. There are also concerns about transparency, as some funds lack clear governance frameworks or public accountability. Additionally, their investments may expose startups and private companies to geopolitical risks, such as sanctions or regulatory backlash, if the fund’s home country faces international scrutiny. Finally, the sheer scale of SWF capital can crowd out traditional investors, reducing competition and diversity in funding sources.
