The development is a sign of how the oil-rich country is increasingly looking into technology, and the venture firms that propel new firms. Venture capital is also an asset class that advocates say plays well to the time horizons and illiquidity tolerances of UHNW families.

STV, the Saudi Arabia-based venture capital fund, has recruited Ivan Jakovljevic from Google to transform its portfolio of start-ups into firms with a market cap of $1.0 billion or more – aka “unicorns”, a report said.

Bloomberg (9 February) reported that Jakovljevic will join STV - which backed Dubai-based ride-hailing firm Careem before its sale to Uber Technologies - as chief development officer in March. He was previously head of new markets for Google in the Middle East and North Africa.

WealthBriefing has contacted STV for further details and may update in due course. 

“Saudi start-ups are at an inflection point,” STV chief executive officer and former Google executive Abdulrahman Tarabzouni was quoted as saying in an interview. The fund is “nurturing what could become another two-to-three unicorns over the next few years,” he said.

The Middle East’s technology sector has expanded since ride-hailing firm Uber last year agreed to buy Careem and Amazon.com acquired Souq.com in 2017. Almost 600 start-ups received more than $700 million in funding last year, according to a MAGNiTT report (source: Bloomberg).

Jakovljevic, who has an MBA from Stanford University, will help grow firms like Trukker, a digital marketplace for land freight that raised one of the largest initial rounds of capital for a start-up in the region, and Mrsool, a delivery app that’s more popular than Uber and Facebook Inc in Saudi Arabia, the report said. 

A study of VC by Cambridge Associates, published late in January, found that institutions in the top decile for returns had an average of 15 per cent allocation in venture – and some higher than that, and a greater share may be appropriate for private investors. In fact, families should consider bumping VC up to 40 per cent of their assets if their time horizons can accommodate it, it said. The asset class has matured from the highly volatile pattern of returns seen in the dotcom frenzy of the 1990s, and changes in the structure of how companies are financed and owned means that potential for VC is much greater today, the report, entitled Venture Capital Positively Disrupts Intergenerational Investing, said.

One concern has been that there is now more than $2.0 trillion of “dry powder” in private capital markets (private equity, private debt, venture capital and forms of infrastructure) – a term applying to money that is available to be deployed. Without sufficiently profitable opportunities, the concern is that such a large lump of money will squeeze returns. Preqin (25 September 2019) found that venture capital assets under management doubled over five years up to 2018, reaching $856 billion as of December 2018. VC comprises 14 per cent of the $6.06 trillion global private capital industry.