It all starts with a problem
If you read the Economist this format might not be new to you, but we are bringing it to water. Here is my take on the top six phrases that will be used in water innovation this year.
1. PFAS Destruction
PFAS has finally reached mainstream media. Once relegated as only a water issue, it has become a major public health concern. The race to PFAS destruction is officially on. I am especially excited about Aclarity’s third party verified pilot results confirming continuous destruction of up to 99% of PFOS in landfill leachate. That being said, it’s early days and we are still waiting for the first commercial scale system to hit the market. I predict that this year will be the year. But who will be first?
2. Venture Debt
With the collapse of Silicon Valley Bank, water start-ups face the real possibility of locked up capital and missing payrolls. There was a rush to support start-ups and offer operating loans from consortiums of investors and companies like Brex who received $1 billion in payroll loan requests in the 48 hours after the collapse. It will be interesting to see how venture capital evolve and the likely increasing utilization of convertible notes in SVB’s absence. As we look beyond the immediate crisis, the big question in my mind is: what does this mean for the future of venture lending?
Coming from a largely technical sector, we are notoriously bad at telling the water story. We’re slowly getting better but need to charge forward on this front. I am excited to see innovators in our portfolio paving the way as they’re sharing their stories with investors and customers outside the water space. Companies like Epic Cleantec has taken its solutions mainstream; the organisation was recently named #1 in Fast Company’s Most Innovative Companies 2023 in the small and mighty category.
Okay, this might not be a new concept but it is here to stay. As start-ups are offering more advanced, complex solutions to stay competitive, we are seeing a decline in pure hardware plays in favour of hybrid solutions with software integrations. This is enabling start-ups to shift away from one-time purchase agreements towards recurring revenue pricing. Business plan innovation, particularly water-as-a-service, remains one of our most popular topics during our Accelerator curriculum and with current market conditions, we only see this increasing.
5. Pilot Funding
We’ve all heard about the valley of pilot death and are trying as an industry to get past it. Our partner, Sivan Cohen of Xylem Innovation Labs did an excellent job of covering this in the March Aquatech blog titles ‘Avoiding death by 1000 pilots’. So I’ll keep it short. I have been working on this very issue over the past five years and am excited to see more money and more players speeding up the adoption of innovation. This year, Imagine H2O will be doubling our pilot funding capabilities and are looking to support 10+ projects globally.
Water is often delegated to the side-lines of the climate mitigation discussion. If climate were a basketball game, then this year, water is the Andre Iguodala, aka the 6th man that isn’t a starter yet but is seeing more playing time. During our 2022 start-up intake process, we saw a substantial increase in energy efficiency solutions and more novel mitigation technologies, including methane capture and algae harvesting. A bonus word for this category would have to be green hydrogen. Last year, we supported our first company in the space, Ossus Biorenewables, which produces green hydrogen directly on-site using waste carbon from effluents or wastewater. We only expect this space to grow and who knows, water just might make it to the starting line-up next year.
The fun part of this blog format is that in a year we get to see what I was right about and where I missed the mark. What are your key words and phrases for 2023?
- Kelly Trott is a VP at ImagineH2O, an international non-profit start-up accelerator that provides organisations with mentorship and introductions to investors, strategic partners and end-users.