The startup successfully secured $25 million in funding in 2022, with Aramco’s Prosperity7 acting as a lead investor in the funding round.
The Biden administration has compelled a Saudi Aramco-backed venture capital firm to divest its shares in Rain Neuromorphics, a Silicon Valley AI chip startup supported by OpenAI co-founder Sam Altman. The move follows a review by the Committee on Foreign Investment in the United States (CFIUS), a watchdog overseeing deals with national security implications, which deemed the investment posed potential risks.
Rain Neuromorphics, spearheaded by Altman, focuses on designing chips that replicate the intricate workings of the human brain. The startup successfully secured $25 million in funding in 2022, with Aramco’s Prosperity7 acting as a lead investor in the funding round. However, recent reports indicate that Prosperity7 has now divested its shares in Rain AI, underlining the complexity and scrutiny surrounding foreign investments in strategic U.S. technology ventures.
The CFIUS, an inter-agency committee responsible for reviewing foreign investments that may impact national security, reportedly instructed the Saudi fund to unwind its investment in Rain Neuromorphics sometime over the past year. The move reflects the U.S. government’s heightened vigilance over potential national security threats arising from foreign involvement in critical technology sectors.
The U.S. Treasury, overseeing the CFIUS process, emphasized its commitment to safeguarding national security. In response to the development, the Treasury stated, “CFIUS is committed to taking all necessary actions within its authority to safeguard U.S. national security. Consistent with law and practice, CFIUS does not publicly comment on transactions that it may or may not be reviewing.”
OpenAI co-founder Sam Altman has not issued an immediate response to the Reuters request for comment on the forced divestment. The incident sheds light on the intricate web of geopolitical considerations intertwined with technology investments, particularly in the field of artificial intelligence.
The broader context reveals a trend of increased scrutiny by the U.S. government over foreign involvement in critical technology domains. In a parallel move in August, the U.S. expanded restrictions on the export of sophisticated artificial intelligence chips, including those from Nvidia and Advanced Micro Devices, to encompass select countries in the Middle East. This regulatory expansion aimed to curb the proliferation of advanced AI technology that could have potential military applications.
The implications of such interventions are far-reaching, not only impacting individual startups but also influencing the broader landscape of AI development in regions like the Middle East. The forced divestment of Saudi Aramco-backed Prosperity7 from Rain Neuromorphics underscores the delicate balance between fostering international collaboration in technology and safeguarding national security interests.
As nations grapple with the evolving landscape of technological advancements, instances like these exemplify the challenges faced in navigating the intersection of innovation, global investment, and security concerns. The incident serves as a reminder of the intricate dance governments must perform to strike a balance that fosters innovation while safeguarding national interests in an increasingly interconnected world.