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ALIAD: the (many) advantages of innovation capital

Air Liquide believes that innovation must form part of an open ecosystem. In 2013, the Group created ALIAD, a venture capital company, to acquire stakes in promising start-ups in three areas: energy transition, healthcare and digital. We spoke to Matthieu Eyriès, director of this entity, which has eight members based in Paris and San Francisco.

Can you tell us a little about ALIAD?

Air Liquide Venture Capital or ALIAD is the venture capital arm of Air Liquide. I prefer the term "innovation capital" because, while risk is inherent in any investment, our main job is to direct capital towards innovation projects. Created in 2013, ALIAD was one of the very first innovation capital funds launched by a large group. Our vocation is to identify and support high-potential start-ups, i.e. help them transform an idea, an invention, into a product and an innovation, in a sustainable and profitable way. This means that we provide them with the capital as well as the scientific, technical and commercial resources that will allow them to grow quickly.

Why did you create this kind of structure at Air Liquide?

At the turn of the millennium, the Group realized that most innovation processes were taking place outside of large groups, in more agile, less risk-averse, but also more fragile ecosystems. Alongside its own innovation activities, Air Liquide therefore decided to create ALIAD to interact more effectively with these new ecosystems and extract value from them. Other tools have been set up within the Group, such as i-Lab, the innovation laboratory dedicated to deciphering new business trends and disruptive innovations. With the creation of ALIAD, the idea was to create a means of aligning the interests of the various innovation partners (large groups, start-ups, universities, public and private funding). Sharing the risk on capital is one of the most effective ways to ensure this alignment.

In what areas does ALIAD invest?

Our investment philosophy is obviously linked to promising areas related to Air Liquide's strategy. The sectors we look at are all growth drivers for the Group in its medium- to long-term ambition, starting with the energy transition and the decarbonization of our economy and consumption patterns: from hydrogen to biogas, energy efficiency and CO2 management, its capture, reuse and sequestration. The second pillar is innovation in Healthcare and in particular what will enable the Air Liquide group to become a benchmark player in the treatment of complex chronic diseases at home. Our third playing ground is digital, primarily focused on Industry 4.0. Lastly, we are looking at cutting-edge fields (deep tech) and exploratory fields for the Group, such as nanotechnology, space, water treatment and responsible agriculture.

How do you select the start-ups you invest in?

So far we've directly supported more than 35 companies through direct equity investments and many others via investment funds, with a total of approximately €100 million. Each year, we explore between 1,000 and 1,400 opportunities, and ultimately we select just two to five projects. We have many channels for identifying them. Our network of investors, of course, because we're very connected to other corporate funds and private equity firms; but also the entities of the Air Liquide group, Innovation campus and operational entities, in the countries where we're active, which introduce us to start-ups that they work with and with which we decide to go a little further. Lastly, we're an identified player in the tech investment ecosystem and many start-ups contact us directly.

And in concrete terms, how do you support them?

There's already a financial contribution. On average, we invest between €1 million and €5 million per project by acquiring a stake as a minority shareholder. Although we're a minority shareholder, we're a strategic partner for these companies because we provide them with capital, industrial expertise, market knowledge and a network that supports them in the various phases of their technological and commercial development. And, of course, we're developing partnerships between these start-ups and the Air Liquide group. Most of these companies are located in North America and Western Europe because, even though our mandate is international, our business remains above all a local business, made up of very regular dialog and a relationship of trust with the managers and their teams. Our support is generally provided over five to six years and we exit the capital when the opportunity arises and the start-up reaches maturity.

What is Air Liquide's goal through ALIAD?

We have two goals: a strategic goal, to get technology start-ups to work with the Group and co-create value, and a financial goal, so that these companies grow, hire, increase their revenues and deploy their solutions to the widest possible market. 

Of course, there are failures. This is the risk part of our business. But in all cases, whether successful or not, we benefit immensely from bringing these two worlds together: the start-up and the large group. It's a real experience where entrepreneurial behaviors and reflexes are infused into Air Liquide's culture, where taking risks allows for a creative impulse, questioning and a necessary agility. Innovation capital remains an excellent tool for developing the entrepreneurial potential of our talents, by putting teams in the dynamics of small, agile structures. Within Air Liquide, I remain convinced that there has always been a strong potential for entrepreneurial development. We're a group of individuals who are passionate about what technology can do for progress. For all of us, being confronted with start-up dynamics teaches us to make decisions with a high level of uncertainty about the future. In an increasingly unstable economic and social environment, this is a real opportunity for our Group.

Could you give us some examples of investments?

The success stories we've had include Proxem, a text mining company specializing in artificial intelligence based on semantic algorithms that we supported throughout its development phase and that we sold to Dassault Systèmes in 2020. In a field that straddles nanotechnology and the environment, we recently invested in Forge Nano, a U.S. company based in Denver (Colorado) that specializes in atomic deposition, i.e. the ability to cover a surface (a cathode, for example) with a very thin layer of material – the thickness of an angstrom. There are a huge number of applications, especially in the manufacture of electric batteries, as this technology improves their life span and charge cycle. In the field of Healthcare, we're supporting Diabeloop for example, a start-up developing an algorithm that can replicate the behavior of the pancreas. Its applications are very promising because they allow type 1 diabetics to become considerably more independent with respect to their disease. More recently, we invested in Flying Whales, an ecological and innovative solution that is unique in the world for transporting heavy loads (such as wood) by airship. 

All of the projects we support are promising for the future. It's tremendously gratifying to feel that you're contributing to solutions to the major societal and environmental challenges of our time.

Article published on June 21, 2021