This interview was conducted for ‘New Fusions in Advanced Materials Innovation and Corporate Venture Capital’, a new report from LEIF and Global Corporate Venturing. The report is sponsored by Airbus APWorks, the advanced materials and additive manufacturing subsidiary of Airbus, and Saudi Aramco Energy Ventures (SAEV), the corporate venture capital subsidiary of Saudi Aramco.
Headquartered in Dhahran with offices in North America and Europe, SAEV’s mission is to invest globally in start-ups and high growth companies with technologies of strategic importance to its parent, Saudi Aramco. SAEV invests in upstream and downstream oil and gas, petrochemicals, renewables, energy efficiency and water sectors. The group was established in 2012 with a $500m investment capital allocation. Typical investments are $5-10m.
Already the world’s largest oil producer, Aramco aims to grow its petrochemicals business. SAEV will help fulfil this ambition by investing in break-through advanced materials technology businesses that can provide competitive advantage to Aramco’s chemicals businesses midstream and downstream. The advanced materials investments in its portfolio today are:
- Novomer: a Massachusetts-based business commercializing a novel catalyst system that transforms waste carbon dioxide (CO2) and carbon monoxide into high performance, low cost polymers.
- Rive Technology: a New Jersey-based catalytic and separations processes business using ‘molecular highway’ technology to refine petroleum, produce chemicals and biofuels, and purify air and water.
Dr Richard Riggs joined SAEV’s Aberdeen-based team in his native Scotland last year after eight years at the German chemicals giant BASF, most recently in its corporate venturing unit. One of his responsibilities at SAEV is to help increase the number of advanced material technology businesses in the portfolio.
LEIF: SAEV’s current advanced materials investments are all based on innovative catalysts. What is the relevance of advanced materials to catalysts?
Richard Riggs: Catalysts are materials that accelerate chemical reactions. They are universal in the chemicals industry. Through new catalysts, chemical processes can be improved or indeed new chemical processes and products can be developed. Such catalyst technology requires innovation in materials science- catalysts can be seen as advanced materials themselves. We have good examples of this within our portfolio. Novomer, which is based in Massachusetts, uses novel catalysts developed at Cornell University that enable the cost-effective co-polymerisation of CO2 with other basic chemical feedstocks like ethylene oxide or propylene oxide. New Jersey-based Rive Technology improves the performance of catalysts at the molecular level to enhance their performance.
LEIF: SAEV’s investments have to have strategic relevance to Aramco and Saudi Arabia. What impact will advanced catalysts and catalytic processes have on the ground for Aramco?
RR: Saudi Arabia has the largest reserves of the most important chemical feedstock, oil. What’s more, oil is cheaper to produce in Saudi Arabia than anywhere else in the world. So we already have a strategic advantage, which we want to build on. We are interested in catalytic process that can transform oil into chemicals as quickly and efficiently as possible, as well as those which allow the development of novel value-added materials systems. We’re also interested in advanced materials innovation that allows us to use gas as a chemical feedstock, and there is an abundance of unconventional feedstocks such as carbon monoxide and carbon dioxide, which can be captured and used to create valuable products.
LEIF: What are SAEV’s interests in advanced materials outside of the realm of catalysts?
RR: SAEV is interested in materials innovation that can improve all the processes of an integrated oil and gas company. Solar and water are also strategic issues for Aramco and the Kingdom of Saudi Arabia. Materials that can eliminate or reduce corrosion are at the top of our wish list, along with new membrane materials that can be used for gas separation and water desalination. Other areas of interest include; fuel additives, water treatment systems, drilling and well treatment materials, enhanced oil recovery systems, tracer materials, desulfurization systems, high-efficiency photovoltaic systems, thermal insulation and heat transfer materials etc.
LEIF: How does Aramco work with SAEV portfolio companies?
RR: SAEV will only invest in companies where we see a strong possibility that the technology will be adopted in Saudi Arabia. SAEV has an in-house business development team whose job is to connect our portfolio companies to the right technical specialists in business groups in Saudi Aramco, whether for piloting, commercial deployment, or for joint development projects. We also aim to support portfolio companies doing business in the Kingdom by helping them navigate contracting processes, providing support with setting up local operations, introductions to other potential customers in the Kingdom, and so on. On the other hand our investment team is comprised of a highly-experienced group of professionals with backgrounds in VC, corporate VC, corporate development, investment banking, entrepreneurial management, and strategy consulting. We are actively engaged with our portfolio companies at management level, often taking seats on the board and helping wherever we can to support the companies’ growth. Our aim is to be known in the market as a value-adding strategic investor.
LEIF: Who are the other active investors in this sector?
RR: The venture units of the other oil and gas majors are also active, though they may have different priorities to us. But there are several other co-investors in SAEV’s advanced materials portfolio that aren’t focused exclusively or even mainly on oil and gas. Corporate venturing groups in the chemicals, automotive, power and industrial sectors are active in this area. It’s good for companies when they have investors from different industries behind them. There are also several highly experienced financial venture capitalists with an advanced materials focus. We’ve co-invested with some and are keen to do more in the future.
LEIF: Which parts of the world do you expect to source your investments?
RR: The Aberdeen office where I’m based looks at Europe, though SAEV invests globally. Besides Saudi Arabia, we have offices in North America, Japan and Korea. My experience in European venture capital gives me confidence that we won’t lack dealflow in Europe.
LEIF: What areas of technology innovation excite you most? Where do you foresee technological breakthroughs?
RR: Technology innovation can come from all sectors, however it’s pretty difficult to predict what is coming up next. It is important to be open to look into all sorts of technologies, and from different sources. Some of the most exciting innovations come from cross-fertilisation between sectors. Advances in computing, microfluidics, nanotechnology and genetics are already driving innovation in new materials, and we expect this to continue.