Now here on FI Institute television, what about the issue of growth funds in the world and how they are developing?
Entrepreneurial dynamism that's happening is incredibly impressive. I think we're in for a period of very high growth here. I think it could be an incredibly dynamic region.
I'm joined by Bill Ford who's CEO of General Atlantic. Bill, welcome. What are the assessments that you are making at the moment about where growth really is in the world?
We're very excited about what's happening right here in Saudi Arabia and the GCC. We see it as one of the more dynamic regions in the world.
4% growth, a trillion dollars of non-oil growth expected to be added over the next three to five years. Entrepreneurial dynamism that's happening. One key fact: if you look back the last five years, there was only about $150 million per year of venture capital going into Saudi companies. Today there's over a billion, last year actually 1.4 billion. You have an entrepreneurial ecosystem beginning to take hold. A number of companies going public on the exchange, which has deepened its capital market. So a lot of reasons to be excited about Saudi Arabia and the GCC.
At General Atlantic you're worth about 100 billion at the moment, keep rising very fast. You do have a history though of groundbreaking investments. Where do you think the sectors are here which are going to develop at the speed that you need?
Here in Saudi and here in the GCC? I think fintech is actually a very exciting area. They've always had great financial institutions and there's a tremendous amount of innovation happening. So we've done well at fintech around the world but I think it'll be particularly interesting here. Also AI. I think that the region is making a real forward commitment to AI and has two of the key assets that are required for success. One is access to power and cheap power, and the second is capital. Unlike the internet cycle which was not capital intensive, AI is capital intensive and will take a lot of dollars to fund data centers, chips, etc. So I think the region's very well positioned to be successful in AI and I've been very impressed about how it's taken a very forward look at the opportunity.
Certainly here there does seem in the first day of the conference to be a real sense that AI is moving far faster than most people really realize. Do you reckon that you at Atlantic have a handle on the speed at what this is happening at?
Well, it's moving faster than the other tech cycles we've been involved in. We've invested through the PC cycle of the 80s, the internet cycle of the 90s, the mobile cycle of the 2000s, and here we are with the AI tech cycle. And I have to say it feels like it's going to be larger than the other three, and it's going to move much, much more quickly.
Do you have clarity about what's going to happen, when, and how?
Not exactly. I think a lot of the early days of these markets, it's very hard to pick winners and losers early on. But I can say that the pace of evolution in terms of how quickly the technology is evolving and how quickly these large language models are advancing is incredibly impressive. And I think what we haven't seen yet though are the exact applications that will leverage this technology to provide real solutions in areas like healthcare, education, art, and other areas like that.
Now you're headquartered in New York, but you're global and you've just opened an office here in Riyadh. Why have you done that?
Well, we're very excited that we announced the opening of our Riyadh office this week and are now licensed to invest here. And we really wanted to put feet on the ground or get an investment team on the ground to capitalize on what we see as a very significant opportunity to invest in high-growth companies. And what starts as a venture capital market evolves into a growth equity market, and so for our form of growth capital, the conditions really are right for us to be investing here.
How would you describe the maturity not just of the Kingdom's fintech sector but also in the region? Is it mature enough for you?
It's beginning to be mature enough.
Well, it's really just about there. And let me make some comments about why. First, we've had a vibrant venture capital ecosystem that's been operating for the last five-plus years. Second, human capital. Talent is returning to the region and we've seen this happen in other places like China, India, Latin America. When talented people from the GCC and from Saudi Arabia who have been educated abroad, maybe even worked abroad, when they decide to come back to the region to start companies and participate in the private sector, it's a real sign that things are about to take off.
And what kind of returns do you think you're looking for?
Well, we're trying to make 20 to 25% returns for our investors. That's our goal. And if companies can grow at 30% or more, we're able to achieve that. And I think we see lots of opportunity for companies to grow at that level in the GCC. As I said before, very good economic backdrop, 4% GDP growth, even faster growth in the non-oil part of the economy, in a large $4.5 trillion economy already.
