- Red Sea Global, backed by Saudi Arabia’s PIF, and Bunat Ventures launched an AI-focused venture fund to back about 25 early- and growth-stage startups in Saudi Arabia over three years.
- Beyond capital, portfolio companies can pilot AI in RSG’s resorts, airport and infrastructure as real-world testbeds.
- Other domestic capital is mobilising too, including Aramco’s Wa’ed Ventures reserving $100m of its $500m fund for AI deals.
- The push supports Vision 2030’s bid to build a local AI ecosystem, but success hinges on deal flow, talent and regulatory execution in operational settings.
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The newly announced joint fund between Red Sea Global and Bunat Ventures marks a strategic shift in Saudi Arabia’s investment landscape, where thematic venture capital (AI) is being closely integrated with sovereign infrastructure capabilities. RSG’s role extends beyond funding: by offering resorts, airports, and infrastructure as testbeds for startups, it provides competitive moats around execution, scenario-based pilot environments, and potential for vertical integration. These non-capital value-adds could materially improve the speed of scaling and absorbing AI solutions within real operations.
This approach is complemented by other domestic funds like Wa’ed Ventures, which have also allocated dedicated capital ($100 million) for AI, showing a multi-track investment strategy—public-private co-investment, sector/demand-side stimulation, and ecosystem building.
However, several execution risks and strategic considerations emerge. First, acquiring sufficient deal flow of high-quality AI startups within Saudi Arabia may prove challenging, particularly given localization issues: while the fund also supports foreign-founded companies expanding into the Kingdom, competition will likely escalate. Second, infrastructure testbeds like resorts and airports pose logistical, regulatory, and operational constraints; integration of AI under real-world guest-facing or airport operations demands rigorous standards of safety, compliance, guest privacy, and environmental impact.
On the macro level, these initiatives align with Saudi Vision 2030 goals to diversify the economy away from oil. But the speed, scale, and effectiveness with which Saudi can attract and retain AI talent, build regulatory clarity around AI usage, and produce bankable returns will determine whether the Kingdom transforms into a regional or global AI hub. Also relevant is how these funds interoperate with larger sovereign AI infrastructure projects (like data centres, chip manufacturing, or computing capacity) underway through other entities like Humain.
Strategically, investors—both domestic and international—should be watching closely for startup participation, valuation trends in Saudi AI, and interfaces between infrastructure owners like RSG and early-stage tech companies. Opportunities for co-investment, acquisition, or technology licensing are likely, especially in verticals tied to tourism, hospitality, logistics, sustainability, and real-estate operations.
Supporting Notes
- Red Sea Global and Bunat VC are launching a new AI venture fund that will back about 25 startups over three years in Saudi Arabia.
- The fund will invest in early- and growth-stage AI native companies or companies using AI as a core enabler.
- Investee companies will get access to RSG’s resorts, airports and infrastructure to test and validate their technologies in real-world operations.
- Red Sea Global operates 10 resorts and the Red Sea International Airport, which already receives flights from Riyadh, Jeddah, Dubai and Doha.
- RSG is owned by Saudi Arabia’s Public Investment Fund (PIF), formed in 2017 as part of Vision 2030.
- Wa’ed Ventures, a $500 million Aramco-owned fund, has $100 million specifically reserved for AI technology investments.
- A PwC-commissioned report projects Saudi Arabia could gain $135 billion from AI by 2030, equating to more than 12% of GDP.
- Red Sea Global projects to open 17 new hotels by May 2026 and is scaling its portfolio across its tourism destinations.