Welcome to the first edition of the Omani British business council podcast with Mohammed habia , cofounder and partner of phase ventures, a leading or Mon based venture capital firm. Today he is being interviewed by Oliver Blake, vice chairman of the Omani British business council . Please excuse us for any sound quality or background noises as Oliver Mohammad did currently in the comfort of their own homes and both Scotland and Oman as we record these podcasts during the covert pandemic.
Well, welcome to the latest Amani British business council podcast in our series and I'd like to give a very warm welcome to Muhammad Ali. Maybe today. Mama is a graduate of Serra university where he did her bachelor's in mechanical engineering and also the university of bark where he read a master's in science in automotive engineering.
He then went on to spend four years with Fleur , the energy and chemicals company in Farnborough and a further ideas as the managing director of the acid rain group in a mine before then in 2017 co-founding phase ventures, the VC firm and innovation platform, which has the subject of our podcast today. So mom had a very warm welcome to you and thank you very much for taking the time to speak to us today. Thank you for having me. Great to be here.
And just to set the scene for our listeners, Mohamad is dialing in from a very balmy Muscat in Amman today and I'm sat on the edge of a, of a Hill in Scotland where the sun is remarkably shining as well. So , uh , an absolute pleasure for both of us , um, mum . And so I thought I'd , I'd launch straight into it and as I said, you created or co-founded phase ventures in , in 2017 and really it'd be great just for our listeners to understand where the idea came from.
What was your inspiration and how did you get the concept going?
Sure. Yeah. So I mean, I can start from the, from the very start. Um, my partners and I , uh, basically all studied abroad. And , uh, as you just said , uh , I've also worked abroad , uh , before coming to Amman around the same time in 2016. Uh, back then, there's almost no motivation , uh , to basically start your own thing. And you're basically expected to get a stable job , um, with like the family offices or one of the state run companies.
And of course, that's exactly what we ended up doing. Um, although of course we were meeting at least three times a week , uh , in the evenings to discuss , uh, what else we could do to , um, create opportunities for likeminded people , uh , as ourselves. Um, and , uh , well I mean also at that time Oman was actually feeling the crunch from the last , uh , oil crash and we had highly educated people out of jobs or basically leaving the country , um, causing what we call a brain drain.
And so we basically decided , uh , to set up round tables and basically invite many of our peers and colleagues as well as , um, we invited some highly ranked government officials , um , to discuss what we all felt were the gaps in the ecosystem. And that's where basically barring the youth from unleashing their full potential.
So , uh , we also also discuss like things like , um, where the government and private sector could do to play or to plug these gaps and create like an optimal , uh , ecosystem that will allow determined entrepreneurs to create their own opportunities. I mean, one of the questions we always like to pose is , um, you know, like why are all these well known successful companies like Facebook and Twitter, Snapchat, all coming out of places like Silicon Valley and not from our region.
Um, you know, we are the people, they're smarter. Um, or you know , is there like some magic sauce in that region? Of course the answer to that is no. Um , what they are, what Silicon Valley and faces , um , have the same kind of , uh , similar , uh , kind. Um, basically managed to do was create an ecosystem that is inviting to , uh , to the young entrepreneurs.
Um, and so, you know, basically also provide them with , um, all the necessary services that allow them to fully unleash their potential. And so,
okay , so , so you, you, you had this real desire to create an ecosystem in a mod that, that would allow the local population to really engage and innovate. W w so you decided to sort of start phase ventures to enable that. And what was the kind of, what was the next stage after that?
Yeah, so I mean , um, so we , we, we basically started phase ventures and , um , what we thought would be important is , um, you know, one of our partners is an investor. I'm an engineer and the other partner is a software developer developer.
And so we put our minds together and we, you know, like I said, having met with a lot of the big corporates as well , um, we collated all of these ideas and thought about the different, let's say, projects that we could start in order to start basically , uh , boosting this ecosystem. And so the name phase ventures actually comes from, from that. So we actually did things in phases rather than, you know , uh , coming in saying, yes, we want to be just a VC firm, just invest.
Uh , you know, we would basically sit around the table twiddling our thumbs. There's literally nothing to invest in or it would be very difficult to find things to invest in. So we had to go almost to ground zero and start from scratch and , and hence the name phase dentures .
And before, before we go into some, some of the sort of details about the companies that you've gone on to invest in and incubate and help. Um , can you explain a little bit about the specific focus on, on energy, cause that's clearly an area in a sector that you've, you've heavily focused on and you have a real link, a special link with the , uh , petroleum development of man that the country's national oil company.
Uh , can you explain a little bit more about, about that and your thinking behind wanting to start at least in the energy space?
Yeah, of course. So, you know , um, since it's well known that our country and the region is still very highly dependent on the energy sector , uh, we felt it to be the optimal place to start as we could , um, basically be able to quickly add measurable value and show the impactful , um, improvements that , uh, uh, venture capital can actually can, can bring , um, to what we felt , uh, or we still feel is a very complacent industry that is very, very ripe for disruption.
So , um, I mean, like you said, so the, the link to PDO is that we basically partnered with them in early 2018 , um , to basically support the local startup ecosystem as well as , uh , try to help to grow Oman's presence on the , uh, energy innovation stage , um, globally. So , um, it's quite well known that actually PTO has always been , uh , known as an , an innovator and an early adopter of new technologies in the region.
So after having spoken to the leadership there , um, they were really supportive and Reed really shared our vision for Oman. And so basically partners with us to bring , um , investment , uh, things like incubation as well as acceleration , um, into their, like into their arsenal. And , uh , of course one of those partnerships is our slowly getting quite well known now, which is the , um, spark labs energy accelerator, which is the first of its kind in the region.
And actually only one of two girls globally at the time that we launched. Uh , which basically focuses on piloting real-world technologies with the corporate partners. And that's like a very unique value proposition that's very difficult to find it this time.
And I suppose one of the key advantages that these companies then have through the PDO partnership is that unique ability to access the real real time , uh , energy activities going on out in the field and therefore to be able to test their technological solutions and get the data back from, from, from those tests is , is that about right? Exactly. So , yeah ,
basically that's what a pilot is. So the value that we add to the startup is we give them this platform where they're able to , um, go from there. Um, let's say a concept or proof of concept to their proof of value. Um, and then from the corporate side, of course, they get to see technologies that are not available on the shelves.
And so they have the opportunity to actually co-develop this technology and be the first to adopt it and see the efficiency gains , uh, you know, prior to it being globally available.
And as your , as you're taking these companies through this journey then Mohammad , I mean, I understand that there are two sort of role to , to roll back a little bit. I understand there are some very clearly defined areas that you like to focus on. Uh , and we're , you know , we're, we're very used to now hearing about the fourth industrial revolution and robotics and artificial intelligence and , and the future of, of , of technologies coming through those pipelines.
But, but I noticed that you as a company have identified four key areas, so of AI, material innovation, the industrial internet of things, and also alternative business models. Can you explain a little bit why, why you specifically chose those four pillars and how they kind of link into your wider strategy of , of energy investment and your, and your wider vision?
Yeah, of course. So , um, I mean going back again to what really differentiates us from the typical VC model , uh , is basically our close ties to the industry through our partnerships with the , uh, local , um , some international energy conglomerates. Uh, so we get to see firsthand all of the challenges , um, our corporate partners are experiencing in their day to day operations.
And so based on our interactions with them, we're basically able to see trends and basically the direction that the energy industry is heading. And these focus areas that you mentioned we feel are now reaching the maturity level , uh, that are basically, they're ready now to be deployed in these enterprises to help them achieve their short term and longterm goals.
So , so these were, these were kind of the, the areas of potential fastest mobilization areas that you could actually, by innovating, by incubating companies focused on these areas, you actually, you actually could achieve results on the ground quicker than let's say robotics or , or other are the technological areas.
Yeah, exactly. So, so , um, you know, it , it really depends on um, the , the different innovations. Uh, you know, oil and gas and energy in general uses a variety of different innovations . So , um, digital innovations usually are very quick to deploy and very quick to give good results as compared to something more , um , industrial. Um, so we usually tend to look at more of the , uh, let's say digital side of things. Um, as we were, like you said, to show quick wins.
Okay. And for , for you venture capital investment and the whole process and strategy around around it , it is your bread and butter, but, but many of our listeners will not have had much experience of , of how the VC process works.
So could you, could you perhaps use an like take one of your companies as an example and talk us through the process of how you, how you identified them, what kind of processes and filters they have to go through in order to get to that final round , um, you know , where they achieve investment from you and then perhaps just a little bit about how you supported one of your companies success they'd gone on to achieve.
Yeah. So , um , actually our investment process , um, for local and regional startups is a little different to that of like international startups. Um, usually we're a little bit more lenient , um, in our mandates for the , uh , local startups. And mostly , mostly that's because of how young the ecosystem is and the , the lack of deals that we are seeing in the specific areas of focus that we work in.
Um, and so having said that though, our typical process usually starts off with our analysts , analysts. Basically reviewing the startup decks that we receive or startups that we find through research. Um, and if the company fits our high level mandates , we basically then do a deep dive into the technology itself and understand how it works and basically the product product market fit as well as of course go into their financials.
And um , basically once the team has all of the information that they need , um, they basically prepare an I see presentation or an investment committee presentation, which is then presented to us the partners and we usually make a decision then and uh , you know, if we would need any follow on meetings where the founders get to meet the partners, we also do that. We, it's a very, very close relationship. We like to keep very close relationship with Oracle , all our , um , portfolio companies.
Um, and then of course for the companies that , uh, we basically have invested in through the accelerated program. Um, there's a few additional steps as basically their technology needs to be vetted by the corporate partners. And , um , to us, of course, if you get through that really rigorous process , um, having been able to convince a potential paying client like PDO , um, to basically run a pilot for them, it's basically a huge take on our, on our , uh, in our books.
Absolutely. Moment. And you wouldn't be possible to , to, to, to mention one of the companies that has been through that process. Is that, is that something you're able to talk about a company that's now sort of achieved success through, through your system ? Of course.
So, I mean, one of the companies , uh , is a company out of Canada , uh , interface fluidics. Um, they basically , um , developed a chip that is able to replicate , um, uh, well , um, it's called a lab on a chip. And so instead of all of the expensive , um, uh, you know, processes that you need to go through with testing actual samples from the well, you basically test their chips. So it's , it saves a lot of time. It saves a lot of money. It makes things a lot more efficient.
So we accepted them in actually last year's cohort, the first cohort. Um, they then went on to being accepted , uh, to do a pilot for PDO. And , uh, actually previous to this, there has been no technology. So, so this technology has been, I would say, used previously in the medical sector, but never in the oil and gas or energy sector. And so they were the first to be to, to transition this technology.
And so PTO had first eyes, first dibs on, on this technology and it was the first pilot was so successful that actually now they're working on their second pilot and hopefully , uh , once the, once this pilot is finalized and the results are out , um, they continue on to get an actual contract.
Fascinating. And that , I mean , that actually leads to my next question, which is, you know, who you are , uh , an Amani VC firm that is investing in and assisting a firm from Canada who's coming to Amman to, to pilot test and, and , and develop their technology through PDO . So what stage in , at what stage, for example, were they at when you invested in them?
And more generally, are the companies that you invest in , uh , always at a certain level of maturity, do they have to already be at a certain or have achieved a certain amount of success before you look at them? And also on top of that, what are the kind of financial bandwidth, I mean, are you, are you limited in the amounts of , of early investment that you can make or, or do you flex that investment depending on the opportunity?
Yeah, so I mean, interface fluidics , um, I would say was on the far end of what we currently invest in. So our , our current fund, which is actually completely GP funded, but which means it's only partner money, we haven't taken outside money just yet , uh, is predominantly focused on what we call seed to series a. And that basically translates to a funding amount from, let's say, between a hundred thousand dollars up to an amount of $500,000.
So interface fluidics was actually in their series a. And. M it was a rare case, but we really loved the company. And so we were like, we can push our mandates a little bit for this, for this investment. But , uh , our current fund mostly focuses pre series a. Having said that, we are , um , looking or in the process of raising our second fund , um, which will be an energy and logistics focused fund. And , um, basically we're looking at companies , uh , a little bit later than that.
So starting from series a and beyond. And this will have much larger ticket sizes. Of course. Uh, it hasn't been finalized yet, so I'm not sure I can go into too much details about it, but , um, usually, you know, this fund will be mostly focused on , uh , more mature companies as well as able to follow on, on the success of , um , the companies that we've invested in previously.
Really interesting. And does that, are you , I mean, as you said, you can't talk too much about about the subsequent fund, but, but you mentioned that just access, so is this now an indication that you're taking the very successful model you've built in the energy sector and you're now going to expand into other, other areas that are ready , including including,
yeah, I mean , um, when we say energy and logistics, it's mostly on how logistics intertwines with the energy sector cause they're very closely related. You know, you have to move things from one place to another. So , uh , we'll be focusing more on basically logistics on how it relates to energy,
certainly. So it's still going to have that , that kind of nuance to energy focus. And is is a longer term, do you think there's an ambition to go into a completely new sector all together ? So as you say, energy logistics, closely linked, but , uh, you know, could, could phase ventures ever be, you're trying to incubate this kind of capability and talent in a completely different sector or are you comfortable just, just staying close to the area ?
I mean for now we are , um, you know, our expertise is definitely in energy. And so , uh, our current focus is , um, trying to get , uh , Oman , uh, like I said on the , uh, global energy stage , um, through both investment and strategic partnerships. Uh, but we are always open to looking at , uh, uh, you know, other avenues for sure.
Um, maybe not in the next couple of years, but you know, definitely , uh, moving forward , uh , we'll be looking at things maybe more down the uh, finance , uh, space because that's another big , um, and interesting sector to be looking at in Oman as well.
And , and given that some Ahmed , given that sort of that real depth of knowledge and focus on the energy sector, it would be great to get your thoughts on two things really. You know, what your , what your thinking is now around the current energy situation in the region, in the middle East, given such low oil prices and kind of linked to that.
You know , we've recently heard that as petroleum development, Oman PDO is going to be moving to a new sort of branded company called Edo energy development of mine and I , and we believe that there will be a much greater focus on , on renewables in that move. So , so where do you see if these , in all of that, both with the move to Edo but also in a climate where, where energy and oil prices are much lower?
Yeah, so I mean , um , I think it's, first of all, I think it's quite important to differentiate between , uh, what Edo plans to do, which is basically invest in , uh , energy infrastructure and what we are doing, which is investing in the , uh, disruptive technologies that enable that infrastructure.
So, I mean, I can give you a quick example on that is basically one of the companies of our last accelerator cohort , uh, is a company that is looking to transform one of Oman's , uh, largest solar plants into a 24 hour energy production plant through an energy storage technology, which basically uses a byproduct of the energy industry, which , uh, which has sulfur , which , uh , PDO currently spends money to get rid of. And so, you know, two birds with one stone wind for everyone.
And uh, I mean from phase venture's point of view , uh , we definitely plan to , uh , work closely with PDO and , uh , other energy conglomerates to basically help them bridge that gap between the , uh, the startup and corporate worlds as well as basically tried to aid them in enabling them , uh, or in enabling the energy transition.
And I suppose, I mean, back to the sort of conventional energy side of things, I suppose companies such as yours and the, and the ones you invest in are , are going to be even more important in a climate where oil companies have got to cut costs and save as much money as possible because of the lower oil prices. So if you're, if the companies you invest in are enabling organizations like PDO to make savings, then then that's surely got to be good for you.
It's gotta be a good, even more opportunity .
Yes , of course. I mean , um, you know, having worked in the energy industry, as you mentioned, I worked for a floor for about four years. Um, the energy industries very, very , uh, um, risk conscious. They don't like taking big risks. Um, you know , uh, if it's not broke, why fix it? Um, however, as you said now with the current oil prices , um, it's, they basically are being forced to take on , uh, to make big cuts.
And, you know, usually , uh, you know, the last thing you want to do is, is cut costs that actually going forward would actually bring you more myself . So, you know, cutting, getting rid of employees, which is a big asset. You don't want to be doing that. What you should be doing is focusing on these types of technologies that can get you quick wins and , uh, basically bringing you to the forefront of your competitors that are taking their time in this transition.
Interesting. And you mentioned employees, and it draws me back to something I wanted to ask you about, which is really around the sort of the human talent side of all of this. Because you mentioned that a few years ago when you started phase that there wasn't the kind of ecosystem necessarily there that that was required and that's something that you're helping to build.
I'm curious to know how , um , the two things really , one, how are you finding the split between domestic and international investments, the companies you invest in? Um , and equally, you know, have you found that by having set up , um , phase ventures over the last few years, you're beginning to see more of a, of a local throughput, sort of a greater domestic pipeline of talent focused on this space?
Um, yeah, so I mean, as of today , uh, we've basically , uh, invested in seven companies, four of which are actually Omani and three of which are international. So we're actually pretty proud of that. Uh, going into this, we definitely did not expect that. I would say that , not necessarily in the , uh, or focused in the energy sector, but they do have a play. Uh, so for example, some of the companies do , uh, have contracts now with, with PDO.
Um, so I'm actually pretty happy with the current ratio. Um, however , uh, we would definitely like to see , uh , an increase in the local startups tackling the energy industry specifically. And I feel like through , um, the programs that we run, such as the accelerator, we're basically able to bring , uh, international startups to Amman and have them basically rub shoulders with the Omani entrepreneurs , uh, encouraging them to, to basically enter that , uh, that sector.
Fascinating. So it seems that there really is this , um , this growing domestic pipeline and , and, and, and given what you were saying earlier about your main focus being on , on energy and logistics, if there was , um, if there was an another space that you think is absolutely right for the same sort of disruption that you've encouraged in your space, what would that be?
Like if there was another company you really wanted to see, start up in Amman and disrupt an area, you know , what kind of area do you think that is ready for
currently? Um , the area that is mostly getting disrupted right now is the, I would say , uh , consumer technology space out of all of the areas right now. I think the most, let's say VC money in quotation market is going into, into that sector. So that's basically , uh , companies that are disrupting traditional businesses. Like restaurants and groceries , uh, uh, as well as , um, maybe some in the , um , traditional like , uh , uh, tourism space.
Uh , so we have these apps that , uh, you're able to with one click, you're able to set up a whole experience when coming to the region. So that the area I would say is the most advanced. Um, um, in my opinion it's getting a little bit too saturated right now. So we definitely would like to see people branch into like the medical space branch into the energy space because , uh , I would say going forward, those spaces are very important for not only Oman but the region as well.
Yes. And it's been great to see , uh, the , the, the level of innovation that's gone on during this covert crisis. And we , we've seen that many of the , uh , other companies coming out of, for example, the Amman technology fund , uh, you know, w w a real great number and , and I think there's been, one of the numbers was recorded as , as highest, I think in the region in response to the Cobra crisis. So that's, that's very positive.
Um , I think we're sadly moment where we're running out of time. So I just wanted to finish off by asking you one final question really, which is given that we now are entering a slightly different economic world with the lower price and, and , and as you sort of mentioned earlier, that historically there's been a , you know , a tendency for people to want , um, much safer, large corporate private sector jobs or indeed public sector or state owned company jobs.
Um, in this kind of new world , uh, where , where we feel sort of innovation and technology could be King. What kind of advice would you give to those young Amani men and women who are, who are graduating from Amani universities or indeed international universities? What advice would you give them , um , towards this whole space of , of, of embracing innovation and style ?
Sure. So I mean, from experience , uh, as , uh , an investor in VC, we always like to see a founder , um, that, you know, has come to us with an innovation. After having , uh , had , uh , worked in that industry for , uh , you know, a good amount of time because we feel that the best ideas are from the founders that have, you know , uh, witnessed the challenges that their company has been going through.
Uh , and so has been able to produce something that is definitely has a great product market fit. And so my advice is definitely look to getting your dream job with one of the large corporates or you know , um , companies , uh , innovative companies, be it to Gnomon or internationally and uh, you know, keep an eye out for efficiency losses within the company, keep an eye out for , uh , areas of improvement that basically you can capitalize on.
And, you know, once you feel you're ready, you know, make the jump and start your own company. And that's usually how a successful idea is born.
Fantastic. Great advice. And , and mom and thank you so much for your time. It's been, it's been a fascinating opportunity to talk to you and to learn more about the work that phase ventures is doing at a mine. We wish you the very best of luck with continued in investments and , and support. And of course, we're very much looking forward to having you as part of the ODBC technology conference in London.
Uh , we don't know when the date is going to be yet because of the current covert crisis, but , uh , we very much look forward to having you there when it's back on , uh , on the cards.
Thank you for listening to the first edition of the OBBC podcast. If you enjoyed this podcast and you'd like to learn more about what we do, please head to AAO hyphen soc.org forward slash Oman hyphen British hyphen business hyphen council. We look forward to welcoming you on the next podcast.