Saudi Arabia’s Public Investment Fund has invested $400 million into Uber founder Travis Kalanick’s new company CloudKitchens, according to the Wall Street Journal.
CloudKitchens is a food and real estate startup that buys cheap properties across the U.S. and in India, China, the U.K. and elsewhere. “The hope is that their proximity to densely populated areas will make them good candidates for commissary kitchens that can provide food exclusively for delivery, or even miniwarehouses for products people will pay to have delivered quickly,” the Wall Street Journal reports.
CloudKitchens builds “smart kitchens” which are commercial kitchens optimized for delivery, slashing overhead costs for restaurants and food producers to enhance innovation and get into the market with less investment. The company’s website says that such kitchens can help restaurant owners launch new locations and grow their business with “less investment and more upside.” As the WSJ notes, the tenants renting out space from CloudKitchens “might be chefs that want to test out a new food concept but don’t want to lay out the capital or take the risk of opening a new restaurant. Ghost kitchens, as they are known, may also appeal to existing restaurants that want more capacity to prepare food or make delivery available further from their traditional locations.”
The investment is the second into a company run by Kalanick. The PIF invested $3.5 billion in Uber Technologies in June 2016, the largest single investment from a foreign government to a venture-backed startup ever—and still is, according to Bloomberg.
So far, that bet into Uber has not paid off for the PIF. The PIF’s stake amounted to 72.8 million Uber common shares when the ride-hailing company went public this year at a price of $45. When that price was announced, it was already below what the PIF had paid in 2016, and amounted to a roughly $222 million loss.
Since then, the price of Uber’s stock has nearly halved. At the current price of $28, the PIF has lost an estimated $1.4 billion in its Uber investment so far.