RIYADH — In an insightful Q&A with TRENDS, Anthony Berkley, Director of ACT and Head of Investments at FII Institute, Saudi Arabia, delves into the institute’s innovative investment strategies and their commitment to sustainable technology. Berkley discusses the FII Institute’s unique position as a foundation, think tank, and nonprofit, and its focus on impactful investments in emerging technologies across various sectors.
He sheds light on the institute’s approach to ESG investments, particularly in AI and new tech, emphasizing their global perspective in sourcing groundbreaking technologies. Berkley also addresses the challenges and opportunities in today’s dynamic investment landscape, highlighting FII Institute’s long-term investment approach amid the complexities of geopolitics and market saturation.
Excerpts:
Q: Provide an overview of the investments by FII Institute. How focused are you on the ESG investments?
A: Let me begin by highlighting the unique and significant role of the FII Institute’s investment arm, which operates as a foundation, think tank, and nonprofit. Our objective is to not only discuss but actively invest in the ideas shared and promoted on our platform.
Our objective is to not only discuss but actively invest in the ideas shared and promoted on our platform.
Anthony Berkley, Director of ACT and Head of Investments at FII Institute
Our portfolio consists of 10 globally selected companies, not just from our region, that are pioneers in new technologies. These are young companies, in their first to third years of operation. Their technologies address critical issues in our priority areas: sustainability, health, and education. Generally, our companies specialize in one or two enabling technologies: artificial intelligence (AI) or robotics. We seek companies that combine these aspects, demonstrating a clear path to growth, sustainability, and profitability, while contributing positively to humanity.
Q: In terms of investing in AI and new tech, is the market overcrowded? What about the ROIs in investing in AI and similar platforms?
A: That’s a valid concern. Being three years into our journey, we are relatively new. When we started, our investment approach was novel, with few others investing in a similar manner. However, especially in AI, there has been a surge of interest, fueled by the successes of ChatGPT and other generative language models. These AI models are revolutionizing areas like search and natural language processing. This surge in interest is undoubtedly beneficial, but it does raise questions about market saturation and the return on investment in such rapidly evolving fields.
For venture capitalists investing in companies like ours, which apply technology to traditional business issues such as automating a call center, the market may seem a bit oversaturated. However, our focus is different. We seek out companies that provide solutions in what might be termed the application layer, addressing specific challenges in medicine, climate science, talent development, or education. These companies have demonstrated their edge by training models with unique data. Furthermore, these models have been customized for specific solutions, enhancing their effectiveness at the model level. They are also starting to build relationships and showcase their tools’ utility in the market.
We were fortunate to invest in a company that originated from Cambridge University in the United Kingdom, named Dogtooth Technologies. They’re solving literally the classic problem in robotics.
Anthony Berkley
We believe this combination of specialized data, model customization, and business acumen will enable these companies to thrive. This focus sets us apart from many traditional venture capitalists who often concentrate on more hyped areas. Currently, this has been beneficial for us, as it has garnered additional interest in these companies. The growing excitement around AI has made it easier to engage customers who are now more open to integrating AI into their business processes. This is a significant shift from two years ago when AI was still relatively new and unfamiliar to many. AI is rapidly becoming a normalized aspect of business.
Q: Are you focusing on a particular geography for your investments?
A: Our strategy at the institute is inherently global. We engage with a worldwide audience, as evidenced by the diverse attendance at the seventh FII, including significant participation from Europe, the United States, Asia-Pacific, and the Middle East. This global approach is mirrored in our investment strategy. We aim to identify and invest in the best of the best. Our interest is in top-tier entrepreneurs with groundbreaking technologies emerging from institutions like Stanford in the US, KAUST in Saudi Arabia, or Cambridge University in the UK. We focus exclusively on technologies that address major, fundamental problems or crises.
I’ll give you a quick example. We were fortunate to invest in a company that originated from Cambridge University in the United Kingdom, named Dogtooth Technologies. They are a leading smart robotics company. In Cambridge’s Computer Vision Lab, they were pioneers in determining the optimal time and method for picking fruit from trees. They hold the patent for a fundamental innovation in this field, which involves selecting fruit based on color for ripeness. This team was then spun out from the computer vision laboratory to form Dogtooth, combining their expertise with robotics.
Now, their solution is operational in English strawberry fields, picking strawberries at the rate of a human picker. In the field of robotics, a classic challenge has been how to pick ripe fruit without crushing it. Dogtooth is actively addressing this problem. It’s exciting for us to be part of their investment structure and potentially help bring their technology to this region if relevant. We’re proud to support a technology that’s making a real difference.
Q: What about emerging markets like Kenya, Nigeria, South America, and the Asia-Pacific? These regions may not have institutions like Stanford or Cambridge but are still bustling with activity.
A: I completely agree. Readers of TRENDS and we, too, see a wealth of talent and entrepreneurship in these markets. The pipeline of companies in the GCC region, North Africa, Latin America, and developing areas of the Asia-Pacific is strong and promising.
We see incredible opportunities to identify and invest in these companies. For instance, we recently announced an investment partnership with Plant Squad, a Mexico City-based company producing plant-based alternatives to meat products. What sets Plant Squad apart is their development of meat alternatives tailored to Latino tastes, with spicier and distinct flavor profiles. This differentiation allows them to compete effectively with other companies from the United States that lack this specific flavor appeal. Additionally, their focus on healthier, accessible, and affordable products gives Plant Squad a competitive edge in its markets.
One might wonder why a Saudi investment company is interested in Plant Squad. Our interest lies in addressing the greenhouse gas emissions produced by the cattle industry. Plant Squad is a leading company poised to introduce these alternative foods to Latin America and South America, regions with significant greenhouse gas emissions from cattle.
Q: At FII in Riyadh, World Bank President Ajay Banga mentioned geopolitics as a major investment risk. How do you perceive these risks moving forward? What are the major challenges for you?
The World Bank President (Ajay Banga) was very articulate on this point, as were many of the global CEOs who participated in our panels. I listened carefully. What I gathered from their discussions is that in the short term, say the next year or two, they expressed numerous questions and concerns. These centered around crises, conflicts, and unpredictability. Additionally, there are significant issues regarding high borrowing rates and the cost of capital in many markets, which contribute to a somewhat pessimistic outlook in the short term. However, they also expressed long-term optimism. So, while there is short-term concern, there’s a strong sense of optimism for the future.
For us as investors, especially investing in startup companies, our focus is on long-term investments. We anticipate holding these investments for four to seven years. We’re already five years into some of these investments. As such, we’re less concerned with the immediate environment’s impact on our investments. We remain very optimistic about these companies, which possess unique, patent-protected technology and are addressing persistent issues. Their problem-solving capabilities provide an incredible value proposition.