(Photo / Illustration: Dominika Zarzycka)
NurPhoto via Getty Images
The venture capital funding arm of Saudi Arabia’s majority state-owned integrated energy and chemicals giant Aramco (TADAWUL: 2222) is strategically and patiently focusing much of its efforts on artificial intelligence and sustainability, according to its boss.
The outfit currently has $7.5 billion in assets under management focused on deep technology startups grounded in what it deems as “solid science and engineering wherever they may be in the world”, Mahdi Aladel, chief executive officer of Aramco Ventures, said in an interview.
"The icing on the cake is to bringing some of these startups and technologies back to Saudi Arabia to solve local problems and processes whether in the wider Kingdom or within Aramco, ranging from how we run our upstream operations to information or operational cybersecurity solutions.
“People may say that we have a bias for a localization angle and we’d love that to happen. But, the first and foremost filter criteria for investment is technology that has a large enough total addressable market with a product demand that may materialize either today or holds future potential.”
The Aramco Ventures portfolio can largely be split into three segments, according to its CEO. "The largest of these investments are in the AI and digital space. Of course, the noticeable caveat here is that not all digital solutions are AI solutions even though the market is pivoting that way.
“Our humanoid robotics investments also sit within this segment. Overall, we cover the entirety of the AI stack from chips to compute, from network to modelling, orchestration and application.”
The second-largest segment is sustainability or cleantech. “These investments include low carbon fuels, hydrogen, ammonia, carbon capture and energy storage.”
Finally, the third, and somewhat smaller and more generic investment segment for Aramco Ventures is one that clubs life sciences, health-tech, and fintech outfits with “interesting” business models.
Aladel said Aramco Ventures believes in basing investment professionals in local markets in its bid to spot tech and talent early on ahead of others. “We have teams in Palo Alto (U.S.), Beijing and Shanghai (China), Bengaluru (India), and recently committed to having one in Paris (France).
“So, while our investment committee and the business development team are in Saudi Arabia, we are not tourist investors but VC market strategists albeit with one dominant LP ["Limited Partner"] in Aramco. We are realists prepared to expect the unexpected.”
For Aladel - who’s led Aramco Ventures since 2020 and has over three decades of service under his belt at the parent company - knows only too well that not every VC investment will pay off.
"I took the job on August 1, 2020 during Covid pandemic and looked at our portfolio at the time with a third of investments in the red, another third with yellow warning lights and the rest doing little better than ‘ok’. We had to take very tough and painful decisions on whom we were going to back or not.
Mahdi Aladel (right), chief executive officer of Aramco Ventures.
Intelier / Aramco
He vividly recounts that first month in the job which entailed writing off two of his portfolio companies.
“They were good ones but a lot of the syndicates pulled back from them during Covid and we weren’t going to be the only investment backer in both cases shouldering the burden. So, regrettably the plug had to be pulled.”
If anything, the experience made both him as a professional and Aramco Ventures as an outfit stronger, focusing not on what looked good in the moment, but what is likely going to be great in the future.
"The parent company has an implicit understanding of patient capital investment. For Aramco, while financial returns do matter, the real reward is in the several multiples of value it can extract from the unique applications put forward by some of these startups.
“Say if Aramco Ventures were to provide 3X to 4x returns on our invested capital to the parent company, give or take a billion dollars – the figure may be significant for us but is small change for it.”
For context, in 2025, Aramco had a full-year adjusted net income of nearly $105 billion.
"So, what really moves the needle is applications, and the tech advantages we bring to the table. This could be millions of dollars in savings (or gains) just from one solution that allows Aramco to execute a process faster, safer, better, cheaper and more sustainably - a plethora of metrics. That is where the understanding of a patient capital provision stems from.
“We are perhaps fortunate in that way and are not a typical VC pressured by some sort of fund life where you have an investing period of four years, harvesting period of four to six years, and a pressure to exit.”
Aladel said the other advantage his outfit brings to the table for startups is the sandbox approach. “We offer a gateway as well as serve as a conduit to Aramco which is unique place to pilot new things – from cybersecurity to upstream, medicine to Formula 1 racing.”
And its been a very steep journey with the trust of the Aramco leadership. “There are not many corporates willing to take on these big bets using VC as a vehicle to scout, support and deploy nascent technologies. We are just getting started at Aramco Ventures – and there’s more to come.”
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