SparkLabs closes new $50 million fund to back AI startups

The venture capital firm announced Tuesday that it has closed a new $50 million fund, AIM AI Fund, which will back AI startups out of its own AIM-X accelerator in Saudi Arabia as well as other AI startups across the globe

SparkLabs – an early-stage VC firm that has made a name for itself for backing OpenAI as well as a number of other AI startups such as Vectara, Allganize, Kneron, Anthropic, xAI, Glade (YC S23) and Lucidya AI – is gearing up to double down on more startups in the space.

The venture capital firm announced Tuesday that it has closed a new $50 million fund, AIM AI Fund, which will back AI startups out of its own AIM-X accelerator in Saudi Arabia as well as other AI startups across the globe.

SparkLabs’ new fund and its wider investment aims underline the bigger trends that have swirled around AI for the past few years. The explosion of interest in generative AI in particular has led to a surge of startups in the space, as well as a rush of investors looking for the next Open AI – or at the very least, a startup that a bigger company might take over as it looks to sharpen its own AI edge.

AIM-X is an AI-focused startup accelerator that SparkLabs launched earlier this year in the country as part of its AI Mission, a national initiative to strengthen AI technology over the next five years.

There has been a significant rise in AI startups on a global scale over the last few years. As of March 2024, over 210 AI unicorns, valued at more than $1 billion, have emerged, according to the Edge Delta report.

Around 35% of SparkLabs’ new fund will support accelerator participants, with the remaining 65% targeted at making Series A and Series B investments beyond Saudi Arabia, as per co-founder and partner of SparkLabs Bernard Moon.

The accelerator will seek a minority allocation for Saudi Arabia or MENA investments, around 10%-20%, Moon said.

The average check size for accelerator participants will be $200,000, but it can go up to $500,000 in unique situations, Moon told TechCrunch. The Series A and Series B investments will be between $1 million and $5 million, Moon said. It aims to invest between 50 and 70 firms in total from the fund.

SparkLabs did not name its limited partners, but Moon said its LPs include a government fund.