Big money from Saudi Arabia will flow into tech ventures around the globe thanks to a new partnership between the Saudi government and Japanese telecoms giant SoftBank. The aim is to create a huge capital fund of more than $100 billion (that’s three-quarters of the total global revenue raised by venture capital-backed companies in 2015!) in order to accelerate technological breakthroughs. But what are the risks?

Saudi Arabia has traditionally made its money through oil. However, with a current oversupply and drop in demand, the relatively low price per barrel is forcing even Saudi Arabia, one of the world’s largest petroleum producers, to look toward new markets.

One of these markets is tech, an industry that many believe is set for explosive growth. Using its new partnership with SoftBank, Saudi Arabia hopes to strategically invest in promising tech ventures in a bid to diversify its income stream.

Such a huge amount of money undoubtedly has the potential to profoundly shake the tech world and could, some predict, bring about major breakthroughs in as little as 10-15 years.

However, such vast amounts of so-called “free money” could also create instability as the value of various tech startups could artificially inflate, eventually producing a sector bubble. With the number of unicorns (startups worth upwards of $1bn) increasing, some have already expressed their fears that the tech market is on its way toward a bubble.   

Even so, the prospect of a bubble may not be of the utmost concern for the Saudi government. Some pundits are speculating that one of the country’s biggest motivations for making such large investments in tech is to attract companies to Saudi Arabia in the hope of establishing a “Silicon Desert”. That means that, even if the bubble bursts and the Saudi government loses money, it will still have been successful if it has created some amount of influence within their country with technology.

What do you think? Will such a large amount of money benefit the tech industry? Or is it the amount dangerous? 

Email me your thoughts.