- Sarah Jacobs/Business Insider
- The Wing, a network of private clubs aimed at women, criticized the government of Saudi Arabia in a statement to INSIDER.
- Saudi Arabia invested $2.7 billion in the co-working company WeWork, which later invested $32 million in The Wing.
- The financial connection between Saudi Arabia and The Wing is complicated by design, given the Saudi government’s careful avoidance of regulatory scrutiny.
- The Wing appears to be the first US startup to receive Saudi funding that has condemned the government’s conduct.
At first glance, the Kingdom of Saudi Arabia and The Wing have nothing to do with each other. One is a wealthy theocracy in Western Asia with a history of human rights violations. The other is a network of private clubs catering to women in major American cities.
But in a strange twist of fate, one made possible by the complex world of venture capital, Saudi Arabian money helped fund The Wing in its infancy, assisting its early growth. Unlike other startups that have received Saudi funding, however, The Wing isn’t staying quiet about the country’s ongoing crisis over women’s rights.
“The Wing’s mission is the advancement of women,” Wing spokesperson Zara Rahim told INSIDER. “Like anyone with a moral pulse, we have been disturbed by the treatment of women by the Saudi Arabian government, and we have made our views on these issues clear to our investors.”
The Wing’s connection to Saudi Arabia is hardly unique. The kingdom has poured billions into companies like Uber, Slack, and Doordash, and intends to invest at least $90 billion more. According to a recent Wall Street Journal analysis, Saudi Arabia “is now the largest single funding source for US startups.”
But The Wing is not just another startup. It explicitly advocates for the political and social empowerment of women in the broader world – a stance violently opposed by the Saudi government.
This isn’t the first time a member of The Wing’s leadership has criticized Riyadh. In February, CEO Audrey Gelman wrote on Twitter that “the publicity campaign touting ‘reforms’ for Saudi Arabian women was false and disingenuous.”
But it is still a rare and unprecedented exception. By all accounts, The Wing is the first and only American startup that received Saudi-associated funding to publicly and institutionally condemn the conduct of the Saudi regime.
The Wing received Saudi funding through WeWork
How did Saudi money make its way to The Wing in the first place? The answer lies in the inner workings of venture capital, and Saudi Arabia’s particular position within it.
In late 2016, the Japanese conglomerate SoftBank established The Vision Fund, a special investment vehicle designed to funnel cash to promising startups. SoftBank committed $25 billion to the fund, and later persuaded blue-chip companies like Apple and Sharp to chip in smaller amounts.
Most of the Vision Fund’s money came from the sovereign wealth funds of Saudi Arabia and one of its closest regional allies, the United Arab Emirates. Saudi Arabia committed $45 billion, and the UAE committed $15 billion.
Among the fund’s first major investments was WeWork. The Vision Fund invested $2.7 billion in the co-working company in 2017. That earned SoftBank – which committed an additional $300 million – a 20% stake and two seats on its board. Three months later, WeWork led a $32 million funding round for The Wing, in exchange for 25% of the company and a seat on its board.
A spokesperson for The Wing pointed out that, under the current arrangement, there are three degrees of separation between the company and Saudi Arabia. The Public Investment Fund of Saudi Arabia invested in The Vision Fund, which invested in WeWork, which finally invested in The Wing.
Those intermediary steps are there for a reason. “The Saudis have never bought five percent or more of any publicly traded company in the United States, because that’s the level at which you have to report and answer questions,” Thomas W. Lippman, an adjunct scholar at the Middle East Institute who has studied and written about Saudi Arabia for decades, told INSIDER.
“Their investments are quiet,” he added. “They’re made through individuals, or the Saudi Public Investment Fund, but they’re done discreetly. Saudis don’t own things in the United States, because they don’t want to face Congressional or regulatory scrutiny.”
US startups have been mostly silent over Saudi Arabia
The Wing spokesperson argued that a relatively small startup like The Wing can’t be expected to purify every dollar that comes from a tainted source. That is largely true. At the same time, it’s not unreasonable to ask how a startup views the activities of their patrons.
Indeed, The Wing’s statement speaks volumes about the silence of its larger and richer peers. In October, the writer Anand Giridharadas asked seven recipients of Saudi investment, including Uber and WeWork, to clarify whether their funding came with “the expectation of remaining silent about Saudi conduct.” All seven refused to answer.
INSIDER provided WeWork with a detailed list of questions for this article, one of which asked about the company’s stance toward the human rights situation in Saudi Arabia. Gwendolynn Rocco, the company’s senior director of communications, declined to comment.
SoftBank spokesperson Rowan Brown also declined to comment. The sovereign wealth funds of Saudi Arabia and the United Arab Emirates, respectively known as the Public Investment Fund and the Mubadala Investment Company, did not respond to requests for comment.
The Wing’s newly public position on Saudi Arabia is unlikely to affect its business in any measurable way. If anything, it will probably enhance it. But its willingness to break the startup industry’s silence on the subject is bound to increase the pressure on other companies, including WeWork, to say something, too.