Green energy and technology are the new silicon valley
In the 1970s and 80s, Silicon Valley boomed. Ground-breaking advances in computer technology and software were matched with the first boom in investment from venture capital firms. Some of today's household names - Apple, for example - were born in this way and not only brought about an information revolution but also provided huge profit to their investors.
Today the same opportunity exists in the field of renewable energy and clean technology - and for Abu Dhabi.
Venture capital will be a major driver. Already, thousands of companies - many of them newly founded by dynamic entrepreneurs - are trying to develop technology to create energy more sustainably, manufacture more efficiently with less waste and less pollution, or to reduce the carbon we use in our homes, workplaces and cars.
This research and development is expensive and high-risk, but some of these businesses will enjoy phenomenal growth. They are the leaders in the technologies of tomorrow. For now, though, these entrepreneurs need financial and management support to improve, commercialise and expand their products and services and to create viable new companies. By helping them grow and prosper, venture capital creates value for investors.
This process is already well under way around the world. By 2020, about US$600 billion will be invested in the renewable energy and clean tech industries - four times the 2007 figure.
Thanks to its climate and geography, the Middle East and North Africa have obvious potential to make the most of renewable energy and clean technology. But its venture capital industry is still young.
In creating the Masdar Capital business unit, the Abu Dhabi Government recognised both the need to invest in technology solutions and the opportunities for significant returns.
Its mission is to pick companies whose technologies have the best chances of success and provide them with the financial and management services they need.
Over the last five years, we have built long-term relationships with entities such as Credit Suisse and Deutsche Bank, and we now manage two clean-tech enterprise funds that total US$540million.
We have looked at thousands of potential companies, and look at more every day.
Most are rejected. But we become an integral part of the ones we choose to invest in, helping them succeed by developing business models, organisational design and sales management. And in the end, we look for a profitable exit.
In all cases we are interested in companies that combine the best return for our investors with those who help our environment. They are companies like Heliovolt, which has developed a new manufacturing process to produce ultra-thin solar panels at great speed. There is also Duratherm, which has some remarkable technology and facilities to process and recycle oil waste and spent catalysts from petroleum, petrochemical and heavy industries like shipbuilding. This is especially important for us here in Abu Dhabi.
There are about a dozen companies in total. All are dynamic young companies, innovating in the technologies of tomorrow.
Abu Dhabi's commitment is helping to create a new industry - with a strong position in one of the fastest-growing sectors for investment.
And behind it is a growing team of young Emiratis with world-class investment management skills. This is a profession that we hope other Emiratis will want to be a part of here in Abu Dhabi.
Dr Sultan Ahmed Al Jaber is the chief executive of Masdar
Published: August 7, 2011 04:00 AM