How smart funding helps water tech innovation flow

An overwhelming 77 percent of the respondents to the 2013 CDP Global 500 Water report [PDF] identified business opportunities in addressing water-related risks. Of this 77 percent, many companies identified new products and services as one of the opportunities.

As discussed in my August Liquid Assets article, the commercialization of innovative water technologies can be challenging for several reasons. These include a disconnect between the price and the value of water, a lack of funding for water infrastructure and technologies in the public sector, and a risk-averse culture in the water industry.

If one evaluates payback based solely on the current price of water, it is essentially free. As a result, water technologies are saddled with long payback periods. Ongoing budget cuts and pushback on government funding result in an aging and unreliable infrastructure. And the water industry doesn't readily embrace risk-taking, in part because of the need to safeguard public health in managing water supplies.

Despite these challenges, water tech innovation continues.

A stream of innovation

A few articles in the November issue of Global Water Intelligence provide an encouraging view of innovation in funding models and new technologies. The first story, "Water enters the great crowdfunding debate," covers the Oct. 23, 2013 announcement by the U.S. Securities and Exchange Commission (SEC) to propose rules to permit companies to sell securities through crowdfunding, "a way of raising money already proving useful for green technologies from carbon offsets to solar energy." The SEC announcement would permit companies to sell securities through crowdfunding, which could make it dramatically easier for start-ups to raise capital from high-net-worth individuals. The rules proposed by the SEC would allow U.S. companies to raise up to $1 million by crowdfunding in any 12-month period. This move reflects a revolution in how early-stage companies are accessing funding. 

This GWI article gives the example of a new crowdfunding platform, OurCrowd, based in Israel. According to the article, since launching in February, OurCrowd has launched 29 projects and signed up more than 2,000 accredited investors. OurCrowd's first entry into the water sector came earlier this year, when it funded Lucid Energy, a provider of an in-pipe hydropower system that generates electricity from water moving through large-diameter pipes.

An update on Israel's water technology industry, "Sustaining Israel's export growth through water," accompanies the crowdfunding story. Israel has taken the challenge of water scarcity and built an export industry in water tech. According to GWI, Israel's water industry has seen a 170 percent increase in exports over the past six years, and Israel's Export Institute estimates that foreign sales will rise by 12 percent in 2013 to $2.2 billion. 

According to Ofer Zaks, CEO of the Israel Export Institute, "Our water industry remains one of the future growth engines for Israeli exports in the years to come." Recent export technologies and systems focus on leak detection; monitoring water and wastewater streams; UV disinfection and oxidation for municipal and industrial wastewater markets; treating municipal wastewater with algae; an algorithm-based sensor; and wastewater treatment based on a bioreactor platform.

It's all encouraging news. Although we tend to focus on water risks (quality and quantity), a revolution is happening not just in technologies, but in how to fund these technology startups to make the leap to commercial scale.

Photo of euros in water by Route66 via Shutterstock