A Qatari Islamic bank has made its first investment into a Silicon Valley technology company, underscoring how the commercial attractiveness of tech companies is capturing the interest of Islamic investors across the world. VINEETA TAN takes a look.

Qatar First Bank (QFB), a seasoned real estate investor, has agreed to invest an undisclosed sum into SoundHound, a late-stage Silicon Valley tech company specializing in voice artificial intelligence (AI). The investment is expected to close by March 2022. This is the Islamic bank’s first foray in the US tech market and the investment opportunity has been approved by its Shariah supervisory board and will be offered on a private placement basis to qualified investors.

“This landmark investment is a bold new step by QFB to enter the AI technology investment field. We believe SoundHound has great potential for growth, especially after its prospective listing in the US early next year,” commented Sheikh Faisal Thani Al-Thani, the chairman of QFB.

SoundHound, built on proprietary natural language technology, enables businesses to deliver conversational experiences to their customers in 22 languages. This investment comes on the back of market projections for voice AI to be worth some US$160 billion. As a late-stage venture company, SoundHound has a backlog from existing customers, which include car manufacturers, home appliance manufacturers and telecom companies, among others.

The US is the world’s leading tech investment destination: a 2020 report by Tech Nation indicated that US tech companies raised GBP81.9 billion (US$109.11 billion) in 2019, followed by China at GBP32.2 billion (US$42.9 billion) and the UK at GBP10.1 billion (US$13.46 billion). Technology has been an Islamic investor favorite, and it has continued to gain favor over the years on the back of a phenomenal tech boom which has fueled stock performances.

In recent years, more Islamic institutional investors are expanding their tech venture capital repertoire including: GFH Financial Group which joined hands with Schroders Capital for private equity and venture capital deals particularly in the area of tech and healthcare; Silicon Valley venture capital firm Graphene Ventures attracting Saudi company Mohammed Hasan Al Naqool Sons Company to invest into construction technology start-ups in a Shariah compliant manner; and Malaysia Venture Capital Management and Ficus Capital setting up an Islamic fund to invest into early-stage tech start-ups.

“The investment by a local Qatari investment bank in a Silicon Valley company also presents a unique opportunity for local investors and opens up new avenues for cooperation and bilateral investment between both markets,” QFB noted.