Sovereign wealth funds (SWFs) are positioning themselves as major enablers of both domestic and global innovation.
In January 2021, Indian food delivery giant Zomato took a major step toward its IPO on the Bombay Stock Exchange—eventually becoming the seventh-largest IPO in India’s history, raising $564 million. Among its primary investors were sovereign wealth funds such as ADIA (UAE), CPP and OMERS (Canada), and GIC (Singapore). Before the IPO, Zomato had raised $2.1 billion from private equity investors, with Singapore’s Temasek reportedly contributing $100 million.
Zomato isn’t the only Indian tech unicorn backed by sovereign investors. That same month, Flipkart raised $3.6 billion in a funding round that included ADQ (UAE), CPP and GIC (Canada), Khazanah (Malaysia), and QIA (Qatar). According to data from Global SWF, this positioned Flipkart as India’s most valuable startup, with an implied valuation of $37.6 billion.
These cases illustrate a broader trend intensified by the COVID-19 pandemic: the rise of SWFs as venture investors, especially in fast-growing emerging markets like India. This raises an important question: Who really holds the power in global capital markets?
While large investment banks, asset managers, and hedge funds dominate headlines, a new class of influential players is emerging—sovereign wealth funds, public pension funds, central bank reserves, and other state-backed entities—who now manage over $30 trillion in assets.
From Bailouts to Bold Bets
After the 2008 financial crisis, SWFs quietly poured billions into distressed giants like Citibank, Morgan Stanley, and Bank of America. Despite their scale, they were rarely recognized as the saviors of capitalism. Today, however, it is in the digital economy that their presence is most visible and influential.
Armed with massive capital and a need for global diversification, SWFs have shifted from being passive allocators to active drivers of innovation, reshaping the private capital landscape and fueling the growth of digital unicorns—private tech companies valued at over $1 billion. Their backing has helped launch giants such as Alibaba, Airbnb, JD.com, Tesla, Uber, and WeWork.
The pandemic and extended lockdowns accelerated society’s shift toward digital living, inadvertently benefiting these unicorns. In the next phase, SWFs are expected to systematically invest in innovation ecosystems that support their own domestic economies—a powerful and ongoing trend with global implications.
Supporting Innovation and Economic Growth Simultaneously
For many SWFs, investing in technology is a strategic move to support economic development and job creation, especially through homegrown startups. At the same time, it enables them to capture returns from emerging digital industries.
Take Turkey’s sovereign wealth fund, for example—it aims to boost domestic entrepreneurship and become the gateway for foreign investment in Turkey. Similarly, the Public Investment Fund (PIF) of Saudi Arabia and Mubadala (UAE), both prominent backers of SoftBank’s Vision Fund, stand out. PIF has committed $500 billion toward futuristic projects like NEOM City, flying taxis, and even artificial moonlight.
Meanwhile, Indonesia is establishing its own sovereign wealth fund—the Indonesia Investment Authority (IAI)—with an initial government pledge of $5 billion, aiming to attract an additional $15 billion from foreign investors. The UAE, SoftBank (Japan), and the U.S. International Development Finance Corporation (DFC) have already expressed interest. According to President Joko Widodo, the IAI will initially focus on both physical and digital infrastructure.
A Dual Movement: Global Expansion and Local Incubation
Looking ahead, we are likely to see two powerful trends:
SWFs will increasingly pursue tech unicorns in Silicon Valley, China, and other innovation hubs such as India.
SWFs will also turn inward, actively nurturing digital ecosystems in emerging regions like Africa, Latin America, South Asia, and Eastern Europe.
Having gained experience in identifying and backing global unicorns, many sovereign wealth funds are now focusing on cultivating homegrown tech champions—supporting innovation not just as a financial strategy, but as a national development mission.
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