FINANCIAL AND MONETARY SYSTEMS
How Europe’s innovation boost is helping drive investment – a Sovereign Wealth Fund perspective
Apr 14, 2023
Over recent years, many European countries have been creating a favourable environment for innovation across different sectors.
Image: REUTERS/Benoit Tessier (FRANCE – Tags: ENERGY BUSINESS CONSTRUCTION ENVIRONMENT)
Ahmed Al Hammadi
Chief Investment Officer, Europe, Türkiye and Russia; Young Global Leader, Qatar Investment Authority; World Economic Forum
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Many European countries are creating favourable environments for fast-growing technology companies through investment plans and funding programs.
Qatar Investment Authority (QIA) aims to invest in smaller European companies with sustainable business models for the long term.
QIA’s status as a sovereign wealth fund allows for quick decision-making and a long-term commitment to innovative companies.
For governments worldwide, fostering an economic and business environment that enables great innovation is a priority.
Achieving the ideal policy mix of regulatory, taxation, education and funding policies, along with ease of doing business and other factors, is not an easy combination.
As a sovereign wealth fund that seeks to invest in businesses driving the economies of the future, Qatar Investment Authority (QIA) takes a keen interest in innovative models across the globe.
While Asia and the US are often associated with the latest developments in the technology space – and QIA invests heavily in both regions – recent developments in Europe are highly encouraging for investors like us who are looking to invest sustainably for the long term.
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Over recent years, many European countries have made significant progress in fostering a more conducive environment for fast-growing technology companies by connecting research, technology and innovation across the investment lifecycle.
In France, for instance, the growth of innovative companies is an integral part of France 2030 – an investment plan aiming to revive France’s industrial economy and to create tech champions in sectors such as semiconductors, robotics, electric vehicles, nuclear, and renewable energy sources.
In the UK, a new Department of Science, Innovation and Technology has recently been set up as part of the government’s vision to make the UK the ‘next Silicon Valley’, with innovation and technology driving growth.
Similarly, Germany recently unveiled a new €1 billion fund for deep tech and climate tech growth-stage companies to boost start-ups in the country.
We see similar leadership across the European continent, and the European Union institutions themselves are underpinning the drive. Increased funding for both early-stage science, and the commercialization of start-ups and tech projects, is creating a favourable environment for innovation in the deep tech sector.
The results are beginning to show. Thanks to significant capital allocation, early-stage tech companies are thriving, and Europe is leading the way in a growing number of exciting sectors. In Italy, for instance, the venture economy has grown more than tenfold since 2017, reaching €2.5 billion in VC investments in 2022 alone.
Supporting tomorrow’s champions
QIA’s mandate is to generate value for future generations in Qatar. Hence, by definition, our interest is in investing in those companies with the most sustainable business models for the long term. While we continue to invest globally, our strategy towards Europe is increasingly focused on supporting newer, smaller companies that will be the champions of tomorrow.
For example, last year, we invested in the French start-up Innovafeed in its mission to tackle the problem of food security. In March 2023, the company was selected to join La French Tech NEXT 40, in recognition of its leadership in the deep tech and innovation space in France.
In Germany, we are supporting the vertical farming start-up, Infarm, which is pioneering new techniques to grow fresh produce with 95% less water than traditional agriculture.
Also in Germany, QIA recently invested in the process-mining start-up, Celonis, which is a global leader in using AI to enhance organizational efficiency.
In the low-carbon energy space, we recently invested in Rolls Royce Small Nuclear Reactors in the UK, which aim to allow efficient scaling up of these clean energy solutions.
Competitive advantage
The development of innovative and promising new sectors requires an investment approach that can be equally innovative and flexible.
While VC firms would usually be associated with funding such ventures, sovereign wealth funds such as QIA have a distinct competitive advantage – we have no immediate liabilities. This gives us a winning combination of having the expertise to spot promising new opportunities, the agility to turn a deal around quickly, but also the commitment to be a long-term and supportive partner.
Our professional investment approach ensures we are well-placed to support the best firms on their growth journey as they create value for society, across the innovation chain.
QIA’s investment teams are made up of industry experts with the experience and skillset to appraise the merits of each investment. We also have regional teams and country heads who focus on the trends and opportunities within their region, all working together to deploy capital and support the champions of tomorrow.
Our recent investments demonstrate the scale and nature of our ambitions. As we look to the future, we are excited about the investment opportunities across fast-growing European technology firms in the year ahead.
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