Water tech may very well be the subsequent gold rush for European VCs
Whereas many people in Europe take it without any consideration, entry to freshwater right now, and sooner or later, is much from assured. Demand is skyrocketing however provide is diminishing. Most of the methods through which water is used are inefficient and antiquated, and local weather change is making all the downside rather a lot worse.
Europe simply had its most extreme drought in 500 years. Industries are being pressured to close down or divert water from different sources to take care of operations, whereas protests have damaged out over shortages, most not too long ago in France and Spain. Consultants predict that world freshwater demand will outstrip provide by 40% by the top of this decade.
Water applied sciences — from pulling water from skinny air to remodeling saltwater into contemporary, and all the pieces in between — might be important in serving to trade and society adapt to this new actuality.
Sadly, water tech nonetheless receives a small fraction of the whole local weather tech funding. Out of some €50bn invested in local weather tech globally in 2021, simply €430m — lower than 1% — was allotted for water tech.
The <3 of EU tech
The newest rumblings from the EU tech scene, a narrative from our smart ol’ founder Boris, and a few questionable AI artwork. It is free, each week, in your inbox. Enroll now!
The excellent news? There’s an rising cohort of tech startups working to stop the approaching water disaster, and buyers are starting to catch on.
Doing extra with much less
From supply to remedy to faucet – some huge cash, power, and sources go into supplying the water we use every day. Shockingly, as much as half of this water is lost on account of leaky pipes. One other massive chunk is misplaced on account of inefficient use, and in most nations, water is rarely reused. However as water shortage will increase, so does the necessity to begin doing extra with much less.
One firm catering to an up-and-coming section of water-conscious owners is Sweden-based Orbital Methods. The startup, which has raised €65m so far, has developed a bathe system impressed by NASA that reuses water in a closed loop. However don’t fear, the bathe is supplied with sensors that detect urine or different unsavoury liquids, which get filtered out earlier than the water is reused — thank god.
The corporate claims its “bathe of the long run” saves 90% of water and 80% of power in comparison with a daily unit. Whereas the programs aren’t low cost — at $4k (€3,680) a pop — Orbital says that owners might save $1,100 (€1,011) per yr in water payments.
However you don’t essentially want {hardware} to chop water use. Belgium-based startup Shayp’s AI-powered software program can detect whether or not a constructing is leaky and discover the almost certainly supply. Information from the constructing’s present water metres will get pulled into the Shayp platform after which AI mechanically classifies leaks so as of significance.
Buildings, that are among the EU’s biggest water customers, signal a five-year SaaS contract with Shayp, pay 5% of their water invoice and in return, cut back their water consumption by 20% on common. “Buildings can considerably cut back their utilization and make enormous water and price financial savings merely by optimisation – no new infrastructure is required,” says CEO Alexandre McCormack.
Shayp is certainly one of many rising startups harnessing the facility of information to assist trade and society handle water extra sustainably.
Liquid information
Agriculture accounts for round 70% of all freshwater withdrawals globally, a whopping 60% of which is wasted on account of inefficient irrigation and planting strategies.
Greater decision information can go a good distance in serving to farmers optimise their water consumption and liberate extra water for different important makes use of. Constellr, a spin-off from Germany’s Fraunhofer Institute, raised $10mn in seed funding in November to do exactly that.
Constellr’s tech includes a fleet of microsatellites outfitted with thermal and hyperspectral imaging devices that collect high-resolution land floor temperature information every day. The information is used to compile warmth maps that illustrate crop stress and water availability at a sub-field stage, serving to farmers predict a drought forward of time, or regulate their irrigation regimes primarily based on water availability.
Constellr launched its first satellite into house final yr. Inside the subsequent 5 years, it goals to save lots of 60 billion litres of water whereas producing “billions” in gross earnings for farmers.
Whereas Constellr helps farmers adapt to an absence of water, additional north is a startup tapping AI to assist companies and governments cope with an excessive amount of of it.
Based in 2020 by a workforce of Norwegian information scientists and geologists, 7Analytics helps municipalities and companies higher predict flooding — an issue which causes tens of billions of euros in damages annually in Europe alone.
“Our platform can inform you if a flood will happen in your space of curiosity and subject alerts 72 hours prematurely so you possibly can take all the mandatory actions to guard staff and belongings,” CCO and co-founder Jonas Aas Torland, informed TNW in an interview.
Discovering new sources
Earlier this yr, Elon Musk pronounced water shortage a “non-issue” as a result of the “world is 70% water” and “desalination is absurdly low cost.”
It is regarding @elonmusk on @billmaher thinks “there’s loads of water”, desalination will repair all the pieces. To interchange river basin inflows from glacial loss we’ll want ~50x extra desal globally, after which most often should pump it 1000+ miles inland: pic.twitter.com/1XFjuswXqa
— Marcus Gibson (@Marcusgibson) April 29, 2023
Sure, Elon, the world is roofed in water, however solely 0.3% of it’s appropriate to be used. And as for desalination being absurdly low cost? Not a lot. Turning saltwater into contemporary stays considerably extra expensive than sourcing it straight from a river, lake, or beneath the bottom. What the Tesla boss additionally failed to say is that desalination is extraordinarily power intensive, with most vegetation right now being fossil-fuelled.
Fortunately, sizzling nations get a whole lot of solar and the worth of solar energy is plummeting, which has given rise to a section of startups pushing cleaner and cheaper alternate options.
Desolenator, hailing from the Netherlands, has been engaged on this type of tech for nearly 10 years. Desolenator’s system makes use of a ‘hybrid’ sort of photo voltaic panel which is a mixture of normal PV and photo voltaic thermal expertise slated to be 4 instances extra environment friendly than common panels — bringing down the price of the ultimate product: contemporary water.
Desolenator launched its first absolutely operational photo voltaic thermal desalination plant in Dubai final yr. The system has a capability of 20,000 litres per day and may produce potable water at lower than $0.02 per litre — and these prices are anticipated to go down because the expertise scales up.
Another choice, particularly for distant communities, is extracting water from the air — also referred to as atmospheric water technology (AWG). Information of AWG date again to the Incan empire, which used so-called ‘fog fences’ to seize moisture from the clouds that move over the Andes Mountains.
Aquaseek, a spin-off from Italy’s Politecnico di Torino and Princeton College, is tough at work bringing a contemporary contact to this old-school expertise. The startup has developed a prototype AWG machine that captures moisture from the air even at very low ranges of humidity, like within the desert.
Thanks to 2 unique patents (one held 100% by the Politecnico di Torino, the opposite shared equally with Princeton College), the machine can extract moisture whereas consuming a lot much less power than applied sciences presently in use.
Capital flows
Mobilising non-public funding on this nascent water tech ecosystem might be essential if we’re to deliver these options into the mainstream. However there are nonetheless quite a lot of hurdles to beat.
“Backing startups with improvements for the so-called ‘water trade’ — that means consuming water and wastewater utilities — has merely not been an actionable space of funding for VCs,” John Robinson, accomplice Mazarine, a expertise VC specialising in water threat, tells TNW from his workplace in London.
That is partly to do with the truth that water bought by consuming water utilities, in contrast to power, is affordable (for now), and is essentially seen as a public good slightly than an funding alternative. Furthermore, consuming water is usually managed by public utilities who, says Robinson, “lack an urge for food for innovation.”
To get the eye of VC cheque books, Robinson suggests water tech startups broaden their horizons and forge a manner in industries the place water high quality and amount challenges are a headache, or an operational, regulatory, or branding threat.
Whereas water tech funding continues to be nowhere close to the extent it must be at, there are glimmers of hope. An increasing number of startups are coming into the house, and funding rounds are on the rise. European VCs invested €275m into water tech startups in 2022, up from $135m in 2021.
Water tech-focused funds in Europe, akin to Amsterdam-based PuraTerra and Switzerland’s Emerald Know-how Ventures are closing larger and larger rounds, whereas throughout the Atlantic, US-based startup Gradiant turned the first-ever water tech startup to succeed in unicorn standing final month after a $225m increase.
Gradiant was co-founded by two MIT graduates, Anurag Bajpayee and Prakash Govindan, who’ve secured at least 250 patents for his or her expertise, which permits clients to purify and reuse massive quantities of water. The startup is tackling all verticals of water remedy — from sewage to poisonous chemical compounds and has already secured big-name shoppers together with chipmakers TSMC and Micron, and carmakers Hyundai and BMW.
“As world manufacturing and provide chains proceed to advance, they demand increasingly water sources that are more and more uncommon and finite,” mentioned John Arnold, Founding father of Centaurus Capital, who co-led the record-breaking round alongside BoltRock Holdings.
Again in Europe, issues are slightly bit extra sluggish. Water tech startups on the continent have lower valuations than their US counterparts, and the EU has ringfenced little funding for water applied sciences, in contrast to the US with its landmark Inflation Discount Act.
“Buyers are nonetheless cautious of betting on water startups,” Gaetane Suzenet, head of the European Water Tech Accelerator, tells TNW. One of many largest boundaries, says Suzenet, is the shortage of main exits, which might give buyers the boldness to commit.
Five firms have entered the accelerator because it began in 2020. The programme goals to develop this pool to between 25 to 40 firms and make them “European champions.”
“We need to make innovation the norm, discover new financing fashions, and encourage profitable exits to indicate different startups and buyers that water tech is a viable alternative,” Suzenet says.
Accelerators like this are a step in the suitable path however might be a drop within the ocean with out elevated authorities assist and a change in perspective from the funding neighborhood.
Whereas money for water tech has traditionally been extra of a trickle than a flood, as Europe braces for one more drought this summer season, there has by no means been a greater time for VCs to take part within the development tales of early-stage water tech firms.
“It’s about trying on the water otherwise,” says Robinson. “Water tech is not only about making utilities extra environment friendly, it’s about getting ready trade and society for water-related dangers because of our new local weather actuality.”
