Mubadala Ventures, the venture capital arm of Mubadala Investment Company, expects to grow its portfolio of assets to about $1 billion (Dh3.67bn) by 2021 as it deploys capital from its existing and new funds, including a UAE technology vehicle.
Mubadala Ventures was set up in October last year to oversee its parent company’s $15bn commitment to Japan’s $100bn SoftBank Vision Fund, which counts Apple, Qualcomm and Saudi Arabia’s Public Investment Fund as investors.
Mubadala Ventures also manages the $400m Ventures Fund I targeting early stage US tech companies, a $200m fund-to-fund investment business with the aim to deploy $70m each year, and a $400m European fund due to launch in 2019.
"Our investments allow us to develop companies and if they are still growing in two to three years, we can invest in them further through other pockets of capital from Mubadala, or new venture funds in future," Ibrahim Ajami, head of Mubadala Ventures, told The National.
“Our message is: if you are doing well, we will be there with you for the long-term.”
Mubadala Ventures will start raising its second US fund – Venture Fund II – in 2020, and is planning its first-ever dedicated UAE venture fund and support platform for regional technology companies to launch next year. As well as investing in early-stage UAE-based companies either home-grown or originating from elsewhere in the region, the fund is interested in established US and European companies seeking to expand in the region, Mr Ajami said.
“The platform will leverage all of the outbound partnerships and networks we’re developing and all our outbound capital to the benefit of the UAE economy and its entrepreneurial and start-up talent,” he added.
Mubadala Investment Company, like other GCC strategic firms, is seeking new opportunities in emerging high-growth sectors, such as technology, to reduce dependence on oil wealth and maximise returns in a competitive environment. Saudi Arabia's PIF has invested around $50bn abroad in the past year, including in technology companies such as Uber.
Mubadala Investment Company, which has over $200bn in assets under management, has acquired stakes in tech firms over the years. These include a stake in Advanced Micro Devices and ownership Globalfoundries, a maker of semiconductors in California.
Mubadala Investment Company had made several technology investments in the United States before pledging $15bn to SoftBank's $100bn Vision Fund, and the creation of Mubadala Ventures was intended to formalise that. The VC company opens its San Francisco office within the next fortnight, its first in the US, placing Mr Ajami and his team of six staff – set to grow to 10 by the end of the year – at the heart of the Silicon Valley tech and start-up hub.
The US Venture Fund I, which launched last year, is about 25 per cent deployed with investments in eight companies and a new deal completing this month in “a software company transforming the supply chain and logistics industry”, according to Mr Ajami. The four-year fund aims to invest in 25-30 growth-stage companies whose product is tried and tested in the market and are generating revenue. The average investment size is between $5m and $30m.
"We are focusing on areas where we believe technology is changing very quickly and there are unique opportunities," said Mr Ajami. These include digital health care, FinTech, "deep tech" (AI and robotics), and "smart enterprise" – the use of software to transform how companies are run. One of the fund's portfolio firms is Collective Health, a software company that is digitising the US health benefits sector.
The $200m Fund of Funds seeks to invest in established and emerging fund managers with investments totalling $70m per year in US and European VC funds. It has invested in seven funds in its first year of operation.
“It’s a very important part of our business as these funds become our strategic partner and can help us access a particular segment of the market,” Mr Ajami said.