Oct 18, 2017

Abu Dhabi's Mubadala sets up VC shop in Silicon Valley

Photo: Dan Kitwood / Getty Images

Mubadala, an Abu Dhabi-based sovereign wealth fund with $125 billion in assets under management, is opening its first U.S. office in San Francisco as it enters the venture capital business. It also is launching a $400 million venture fund in partnership with Japan's SoftBank Group, and a $200 million VC fund-of-funds.

Why it matters: Sovereign wealth funds are increasing their attention to high-growth tech startups in Silicon Valley, with some like Singapore's Temasek and the Qatar Investment Authority also opening West Coast outposts. "It's more than just setting up an office — it's a real committed and genuine intent to be an active member of this community," Ibrahim Ajami, head of Mubadala's VC arm, tells Axios.

The pitch: Mubadala hopes to impress startups with its deep pockets and its ability to provide introductions to its existing businesses in sectors like telecom, semiconductors, aerospace, and real estate. Expect an exclusive focus on enterprise startups in areas like robotics, life sciences, and software.

The breakdown:

  • A $400 million direct venture fund in partnership with SoftBank Group, each contributing half of the capital. Average check sizes are expected to be between $10 million and $20 million, with a focus on early and expansion-stage transactions. It already has backed Recursion Pharmaceuticals and Color Genomics, with plans to invest in a total of 25 companies in North America and Europe over the next four years.
  • A $200 million fund-of-funds to invest in a mix of VC funds in North America and Europe. Funds it's already backed include Data Collective, Ulu Ventures, and Afore Capital.
  • Overseeing Mubadala's $15 billion investment in SoftBank Vision Fund (although that's a pretty passive job, according to Ajami).

SoftBank collision? Mubadala and SoftBank Vision Fund have very similar investment interests, but Ajami says there's no worry of competition as the latter invests at much later stages.

Background: Mubadala Investment Company is the product of a 2017 merger of two sovereign wealth funds, International Petroleum Investment Company and Mubadala Development Company.

Go deeper