Looking at the sector breakdown, Transport & Logistics saw the highest dollar total in Q2 2021, while both Energy & Power and Resources & Environment had record investment quarters (dollar total). We expect this trend to continue as:
- Corporates look to engage with innovation to deliver emissions reduction commitments.
- Regulation on environmental impact becomes increasingly strict.
- Customers demand products with lower environmental impacts.
- More green funds and bonds are launched, and more generalist venture capital investors enter this market.
Venture investment in water innovation has typically totalled $100-$200 million per year, but we expect average investment totals to rise as:
- Consumers are demanding sustainable water stewardship.
- The scarcity of potable water is increasing.
- incidences of drought and flooding (causing contamination) are increasing.
An interesting example of manufacturers realizing their water stewardship responsibilities is seen in the food and beverage sector. Food and beverage wastewater outputs usually have high-organic content and so can cause eutrophication, reducing the available oxygen in water systems. Companies including ABinBev and Diageo have launched challenge-based accelerator programs to find innovators to run pilots. These commercial and industrial pilots are seeking improve the efficiency and performance of internal wastewater treatment capabilities, improve the efficiency of manufacturing water use and recycle or harvest water from alternative sources like rainwater.
The commercial and industrial sector represents a key route to market for innovators as the public sector is more risk-averse. Utility scale water providers need to ensure a safe and steady supply of potable water without disruption, or they face hefty fines. Therefore, many innovators seek to prove their technology in smaller scale commercial and industrial operations before looking to gain larger public contacts.
Partnerships are also an important route to market for innovators seeking to operate in the commercial and industrial markets. One such Swiss company is GWF Mess Systems, which specializes in the collection, communication, and interpretation of consumption data for electricity, gas, heating and cooling, as well as water and wastewater. The company seeks long-term partnerships with other manufacturers and leading system integrators for whom it produces high-quality measurement and data systems. The company is particularly active in the water and wastewater space, for providing high-quality measuring instruments to enable monitoring and system efficiency.
In speaking about their positive and negative experiences of export partnerships GWF said:
We have had the best experience with local, well-connected partners, who manage to translate our typically Swiss traits and help us to categorize local customs. In addition, of course, there are some “learning experiences" with delayed projects - you simply need staying power and some willingness to take risks, but above all - and this probably applies even more to SMEs - lived and reliable partnerships.
Water infrastructure across Europe is aging. Over 25% of Switzerland’s water infrastructure was built in the 1960’s and 70’s with a service life of 30-100 years. Monitoring software for quality and predictive maintenance is increasingly valuable to operators to prevent leaks and breakages before they occur. In Switzerland, infrastructure upgrades are estimated to cost CHF 81 billion ($87 billion) between 2015 – 2055.
Switzerland has high-quality water and sanitation systems and repeatedly recognized superior tap water, with a better ecological balance than bottled water. Therefore, Swiss-based innovators like Droople are applying their origins as a water quality leader to locations where there is growing mistrust of potable water. Speaking to Droople’s Co-Founder & CEO Ramzi Bouzerda, he explained the markets that were particularly interesting to them:
‘The US and UK are interesting markets for us in terms of water availability and quality, while the EU's growth strategy (the Green Deal) is boosting investment in water infrastructure. We are working with the network of Swiss Business Hubs and Swissnex to perform market validation and expand Droople's presence in international markets. There is also great potential in the Gulf States and Asia Pacific, where there is growing public concern about the quality of water coming out of the tap, which is increasingly governed by very strict compliance regulations.’ Ramzi Bouzerda, Co-Founder & CEO, Droople
As Covid-19 recovery plans roll-out across the world we expect greater access to public finance for key water and wastewater infrastructure. We expect innovators to grow from pilots and test-scale plants in private commercial and industrial markets into utility-scale projects for infrastructure monitoring and advanced wastewater treatment technologies.