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Water Intelligence
Market-Leading Analysis of the International Water Industry
www.globalwaterintel.com
Market Profile:
Beating the burn rate in water
Making the case for water investment
In a market serving conservative and risk-averse clients, how can water technology start-ups find finance? A recent
workshop brought together inventors and investors to discuss ways to break through the funding gap.
I
n 2014, an estimated $550 million of cap- level of those risks to the business.
ital was invested into early and growth- A panel of investors put together for the
stage water technologies. That accounted workshop agreed, saying that ultimately
for just 1% of global venture capital funds investing in a start-up means investing in
deployed last year, proving that potentially people first, rather than technology, with
disruptive water technologies are still strug- the strength of a management team mak-
gling to find the funding to take them ing a key difference when it comes to deci-
beyond the early stages of development, sions on funding.
despite the skills on offer in the sector and John Tonner, COO of Consolidated
a rising awareness of water management as Water, mentioned how important it is for
an environmental issue. technology firms to present potential clients
Finding ways to beat the burn rate opportunities to test technology in genuine such as his company with specific solutions
experienced by many water technologies field conditions, and the fact that the major- to their problems, rather than just promises
which need regular infusions of cash to ity of their customers as monopoly utili- of increased performance efficiency. Tech-
sustain them through to commercialisa- ties are often underfunded and operating nologies also need to be able to differenti-
tion was the challenge at a workshop held in in conditions with no incentive to improve ate themselves from competitors, and show
Athens on the fringes of the Global Water performance. dramatic financial competitiveness when
Summit last month. Sponsored and led by Jeff Green, the founder and former viewed alongside all the other solutions
Amane Advisors, the event brought togeth- CEO of reverse osmosis membrane manu- available to a client.
er a host of successful innovators and inves- facturer NanoH2O, was behind one of the Pascal Gendrot, CEO of sludge treat-
tors to discuss the best ways to bring water most successful stories in water technol- ment firm Orge, discussed the difficulties
technology to market. ogy of recent years (he sold the company for start-ups looking to obtain financing,
While the route to commercialisation for $200 million in April last year). Green particularly in the early stages of devel-
needs to be well defined (see chart below), told the workshop that the key to making a opment. He said that compared to other
in practice water technology start-ups success of a start-up is all about the people industries, attracting seed capital from
often find expansion a frustrating process, involved. His method is to create a list of all independent investors at the initial stage of
regardless of the quality and effectiveness of the risks and problems facing the company development is almost impossible. Despite
their products. in its plans to succeed and expand, and then the risks involved, lower capital burdens
Along with the issue of finding willing recruiting people best suited to managing mean that industries such as IT and bio-
funders, they also have to deal with a lack of each risk, with compensation based on the technology can often find funding based on
1. Voice of customer
4. Business development
Need
Technology 3. Ideation
initial technology ideas, while water strug- Crucially, this goes beyond just providing to sell itself. The panel of investors said they
gles to attract the same level of interest. In another source of finance, with the key dif- wanted to invest in people, so the strength
his own case, early capital funding stages ference being the playgrounds for develop- of the management team is key to this.
were entirely reliant on friends and family. ment offered by programmes like Masdar Secondly, they have to understand that it is
Interestingly, Orge was one of rela- and PUBs water hub in Singapore. Creat- unique and differentiated. Investors have to
tively few water technology firms to opt for ing a space for technology firms to test their hear from the client that they are interested,
an initial public offering as a capital-raising offerings in surroundings which closely this is why partnerships with potential cli-
option, and Gendrot said that the demands mimic field conditions allows developing ents are so important.
of arranging an IPO and complying with technologies to bridge the gap between the Ultimately, I dont think the water busi-
subsequent regulatory requirements can lab and the field. This is a crucial step in ness is any more risky than others. I think
be onerous for a relatively small technology the water sector, where field operating con- the problem is that the water market is less
company. He pointed out, however, that the ditions may affect the performance of a new sophisticated. If you look at biotech or some
process had paid dividends beyond the capi- technology which has hitherto only been of the other science-based sectors, they are
tal raised by increasing public awareness of deployed at smaller scales and under lab ready to value businesses before they have
Orge, and thus acted as a marketing tool. conditions. any revenue. In water that isnt the case.
Alexander Ritschel, of the government- Workshop host Thierry Noel of Amane The workshop held in Athens on 26
funded Masdar renewable energy desalina- Advisors said: The main lesson of the April was anchored by NanoH2O founder
tion programme in Abu Dhabi, talked about workshop was that a start-up has to bring Jeff Green and Amane Advisors managing
the importance governments can have answers to the problems of their clients, partner Thierry Noel. For more information
in the technology development process. and not just think the technology is going on Amane, visit www.amane.biz.