Middle Eastern venture capital firm Riyada Ventures has begun a new investment initiative focusing on cleantech innovations, with an emphasis on renewable energy, water and sustainable construction.
Riyada's new strategy combines the outsourcing and development of direct equity investments in later stage cleantech start-ups in the U.S., along with the sponsorship and development of cleantech infrastructure projects and business partnerships in Gulf Cooperation Council states.
Khaldoon Tabaza“This part of the world, with an abundance of sunlight and silica, is a very appealing location for renewable energy, which can leverage the natural resources of the region in the same way we have done with oil and gas,” said Khaldoon Tabaza, chairman and CEO of Riyada.
According to a statement from the firm, the Arab world has both hydrocarbon and other alternative energy resources, and is in a prime position either to benefit greatly or lose dramatically from the global shift to clean technologies and renewable energy.
Despite the global economic crisis, the cleantech venture investments reached an all-time high of $2.6 billion in the third quarter of 2008, with U.S. companies receiving the lion share with $1.7 billion.
A recent report by AT Kearney indicated that the Middle East will require investment of more than $500 billion in energy infrastructure to aid economic growth in the coming years. The Islamic Development Bank recently estimated that Arab countries may need to invest up to $200 billion in water-related infrastructure alone over the next ten years.
“Solar power, with its relatively low barriers of entry and enhanced economies of scale, can easily become a viable renewable energy source to meet much of the region's power needs, from desalination to basic electricity,” Tabaza said.
Riyada plans to collaborate with leading venture capital firms in Silicon Valley to choose mature cleantech companies that are ready to expand in the GCC.
“Considering its substantial needs for energy and water infrastructure as well as its unprecedented growth in the construction industry, the GCC region has a unique position as both a major market and a destination of partnerships for the cleantech companies in Silicon Valley,” said Marco DeMiroz, a venture capitalist who invests in clean technology opportunities at Trinity Ventures.
“Similar to what happened in the Information Technology sector; venture investors in the U.S. are now fostering the next big wave of innovations in cleantech, from renewable energy, water and sustainable construction, to transportation sectors,” Tabaza said. “By leveraging our network in Silicon Valley and using our know-how, Riyada will seek high quality cleantech investments that are highly relevant to GCC markets.”