Rain, a Startup with Foreign Investors, Faces National Security Concerns in the US
Sales Talks and Security Fears
Rain, a startup that specializes in artificial intelligence hardware development, has claimed to investors that it held advanced talks to sell systems to major tech companies such as Google, Oracle, Meta, Microsoft, and Amazon. However, Microsoft has declined to comment, and the other companies did not respond to requests for comment.
The startup’s funding round last year, led by Prosperity7, saw its total funding reach $33 million as of April 2022, which was enough to operate through early 2025 and valued the company at $90 million. This was disclosed to investors and mentioned that the company’s founder, Sam Altman, personally invested in the company. In addition, Rain’s letter of intent with OpenAI was also cited as a reason to back the company.
In a press release for the fundraise last year, Altman applauded the startup for taping out a prototype in 2021, which he believes could vastly reduce the costs of creating powerful AI models and potentially enable true artificial general intelligence.
Foreign Investment and National Security Concerns
The company’s connection with Prosperity7, a unit of Aramco Ventures, which is part of state-owned Saudi Aramco, drew significant concerns from the interagency Committee on Foreign Investment in the United States (CFIUS). CFIUS has the power to scuttle deals deemed to threaten national security and has long been concerned about China gaining access to advanced US semiconductors.
Rain received a small seed investment from the venture unit of Chinese search engine Baidu without problems, but the larger Saudi investment raised red flags due to its close ties to the Saudi government. CFIUS data shows that in the few cases where it has concerns, it typically works out safeguards, such as barring a foreign investor from taking a board seat. However, it couldn’t be learned why the committee required full divestment from Rain.
OpenAI and its Hardware Needs
OpenAI, a company that Rain has a letter of intent with, may need to find partners with deep-pocketed backers to gain some control over its hardware needs. Competitors such as Amazon and Google have spent years developing their own custom chips for AI projects. Altman has refused to rule out OpenAI making its own chips, but that would also require significant funding.
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