Venture Capital and Water — Let’s Stop Worrying Where the Cool Kids Are

There is a near constant refrain from the water conference circuit (and what an extensive circuit it is) that it is A Bad Thing that there is barely any interest from the Venture Capital (VC) community in water technology.

Continue reading on Medium

Start your Innovation Engine and Start Producing Sustainability Dividends

Guest blog by Jason Carter, Delivery & Innovation Lead, Arcadis North America

The water industry is at an important crossroad. After years of building on principles of reliability and quality, water utilities can be proud of delivering on levels of service. However, every day, that delivery faces major threats, from drought to infrastructure failures to customer push-back on rates.

Leaders in the water industry know that innovation is important to meeting these challenges. In serving as principal investigator for a Water Research Foundation (WRF) project, Fostering Innovation in Water Utilities, it was exciting to see some of the creative ways utilities are making innovation part of the way they perform every day. As a follow-on to this work, we recently surveyed 423 utility professionals on the topic. Ninety percent said that innovation is critical to the future of their utility. But in day-to-day operations? Only 40 percent are engaging innovation as a business practice.

Those who have embraced innovation have powerful stories to tell and ideas to share. Their experience is proof that making innovation a key organizational value actually delivers sustainability dividends and measurable return on the investment of time and energy. The social, environmental and even economic benefits of innovation strengthen a utility’s brand, bottom line and satisfaction ratings, and contribute to the higher goal of improving the quality of life for customers.

In other words, innovation programs are not just for bragging rights. The results are real and even starting with the basics can bring tremendous results. Our studies of hundreds of utilities worldwide showed how innovations such as stormwater harvesting, advanced metering and real-time system monitoring can lead to sustainable dividends in the form of greater revenue capture, improved demand management, waste reduction or increased asset longevity, to name just a few.

In our paper, “Empowering Water Utility Innovation,” Arcadis shows that by building a culture of creativity, investment, experimentation and incubation, utilities can deploy innovations to foster new approaches to serving customers, managing facilities and funding infrastructure improvements.

That said, transforming organizational culture is a process, not a weekend webinar. We have identified the steps to make innovation a business practice to help utility leaders initiate a culture of innovation.

Building this engine of innovation enables utilities to effectively engage internal and external resources to continuously improve operations and increase value for their customers through improved system resiliency, efficiency and quality, the three elements of water sustainability.

From there, the actual innovative practices become second nature, no matter what the need. These include resilience efforts to address water stress or flood risk; efficiency initiatives, such as waste reduction or building intelligent networks; or quality goals in the form of fewer pollution events, or building a truly agile and resilient treatment process.

Engaging in innovation initiatives in turn helps 1) articulate new values, 2) bring needed investment in new processes and 3) most importantly, connect to more ways to see yourself as the agent of change.

Visit http://arcad.is/ACE17-innovator to learn what kind of innovator you are and how Arcadis is promoting #utilityinnovation at the American Water Works Association’s Annual Conference & Exposition (ACE17).

dloHaiti: Reaching the 50 million liter mark

By Jim Chu, Founder and CEO of dloHaiti

 (IH2O ’13) continues to make significant progress toward our vision and I’m pleased to relay some recent wins and challenges.

In March, we surpassed the 50 million liter mark — that’s the amount of affordable, clean water dloHaiti has delivered to underserved communities in Haiti, now serving over 300,000 people in the West, North, and Northeast departments of the country.

Continue reading on Medium

Takeaways from Imagine H2O’s Water Policy + Innovation Summit

Imagine H2O and the Milken Institute convened a select group of California water policy experts and stakeholders at its 2017 Water Policy + Innovation Summit

View this entry on Medium

Water innovationcan lead to more efficient, more resilient, and more equitable management of our water resources. However, innovation doesn’t happen in a vacuum and smarter water management requires a fresh approach to bridge the gap between innovators and policy makers. Imagine H2O’s California Water Policy Challenge identifies and supports policies leading to the broader adoption of water innovation in the state and beyond.

In partnership with the Milken Institute, the Water Policy + Innovation Summit convened policy experts, utility leaders, end users and elected officials in Sacramento to hear from the winners of the 2017 California Water Policy Challenge. An exceptional group of thought leaders, judges, and speakers presented and developed ideas for policies that will help modernize water in California. The Summit also featured Senators Wiener, Dodd, and Stern discussing initiatives already underway and how these pieces of legislation will expand markets for water technologies and improve data-based water management.

What follows is a take away from each session. Our support of these teams and their ideas is ongoing, and your feedback is invaluable. Please comment below or add your thoughts here.

 

1. California’s water rights are stored on millions of pieces of paper across dozens of locations, and this is crippling our ability to properly manage water resources. Uncertainty delays or prevents informed decision making, and goes to the very foundations of water management in California. Water rights are not an abstract concept: managing our water supply depends on storing water across years and diverting water across regions, and that depends on accurately and quickly knowing who has rights to what water. These rights are relational and conditional, and 99% of the 20 million+ pages are spread across 60+ locations. Digitizing these legal records is complex, expensive and time consuming. One example of the magnitude of this task: original paper records need to be retained, so staples must be removed and replaced after scanning. 10 million times. We need a water rights database worthy of California.

Policy Challenge Winners the Center for Law, Energy and the Environment at Berkeley Law (CLEE) and Water and Power Law Group PC proposed creating a modern information system of water rights and water use that will enable deliberate, real-time decision making on the allocation of water in California. Read the Policy Brief here.

 

2. Data can strengthen the economics and resiliency of California’s Agriculture Sector. With the implementation of the Sustainable Groundwater Management Act (SGMA) quickly approaching, changes in how we manage, monitor, and measure groundwater resources is inevitable. California’s farmers are often tech savvy and efficiency minded (think: tweets from tractors), but also understandably dubious of expanded data collection and regulation. Farmers and regulators need not be at odds. We can bridge the gap and reframe SGMA as a win-win: collecting groundwater data will lead farmers to better decision making, cost savings, and the realization of new revenue streams from California’s farms — and proving this will lead to more proactive compliance with the impending regulation and better resource stewardship. Successful implementation of SGMA requires all stakeholders to embrace the opportunity to improve productivity and resilience in a climate uncertain future.

Runner-Up Mammoth Trading proposed incentivizing the agricultural community to participate in groundwater data collection and management through the development of groundwater trading markets. Read the Policy Brief here.

 

Richael Young (Mammoth Trading)

3.Product overload and uncertainty around product performance leads to innovation fatigue for farmers. Although farmers are more than willing to embrace innovation to drive efficiency, they are often inundated with pitches for the next best thing. They often have limited time and resources to identify real solutions in what is becoming a surging market for agtech products and services. Establishing a third party technology validation scheme could allow farmers to identify vetted innovations without sinking significant resources into a purchase decision. Cost of verification will be borne by the vendor and recouped in sales, and a growing demand for proven ag-tech will lead to more, better technology being developed and more efficient use of water on farms.

Runner Up Got Produce? proposed improving access to USDA-backed loans for innovative water efficiency technologies for farmers through third-party validation of vendor-claimed water savings. Read the Policy Brief here.

4. Developing statewide onsite reuse standards demonstrates how regulation can align with proven technology while increasing certainty in the marketplace. Water reuse is a quickly growing water technology market in California, with US$4.3 billion of planned activity in the coming years. Israel and Australia have proven that a modern society can reuse or recycle a majority of its water resources and that effective solutions exist. However, fully embracing this technology requires a regulatory framework that enables the broader deployment of existing technologies. This will grow the market, drive down costs, build certainty for producers and increase water efficiency. As demonstrated in the renewables sector, consistent regulations create the market conditions for innovation, investment and deployment. SB740 is an exemplary case of this logic in action.

SB 740 Onsite Non-Potable Water System Guidelines authored by Senator Scott Wiener directs the State Water Resources Control Board to develop a comprehensive risk-based framework to assist local communities in developing oversight and management programs for onsite non-potable water systems in multi-family residential, commercial, and mixed-use buildings. You can submit comments to Senator Wiener here.

 

5. Once a piece of legislation has been passed, advocates face the challenge of funding implementation. Managing California’s water resources will require innovative policies, technologies, careful planning, and coordination, and this requires detailed data on water supply and water useage. Currently, the State of California collects significant information on water use, supply, and rights. Yet, the provision of this data is fragmented, inconsistent, and is often locked in formats that are incompatible with modern needs. Since AB 1755 has passed the legislature and been signed into law by Governor Brown, only $800,000 has been allocated to support its implementation — the total estimated cost is $3 million. Absent additional resources, funding from private entities or other cost sharing scenarios, the Bill Dodd Bill may remain just a piece of paper much like the data it aims to consolidate.

AB 1755 The Open and Transparent Water Data Act authored by Senator Bill Dodd aims to remedy lack of consistent and useable water data by mandating construction of an integrated database which makes available data on water supplies in a common, open, and well documented data format.

 

What’s Next?

We’ll continue to support these teams on their way to implementation much like we support the companies in our accelerator grow their businesses. Stay tuned for updates on their progress and opportunities to get involved, or voice your interest now in the comments section below or by filling out this survey.

We also have some exciting changes coming down the IH2O policy pipeline. Alongside our partners and an impressive cast of California policy experts, we are creating new opportunities to bridge the gap between innovators and policy makers and harnessing these partnerships to impact water management in California, and beyond.

What we're Reading - May 30th

We're going to be putting out a selection of the stuff we liked each week at the intersection of water and entrepreneurship (and other stuff). We hope you find it a useful way to cut through some of the noise. As always, feedback appreciated!

Water

Philadelphia Water Rate Links Payments to Household Income - Brett Walton Income-based pay rate for water bills in Philadelphia marks a shift in how we are being asked to perceive utility payments, and how that intersects with water as a right rather than a commodity.

Solutions for a Global Water Crisis - Elizabeth Curmi Poor infrastructure and maintenance of available water sources continues to deplete this precious resource. Estimates nearing $10 trillion may be the world’s solution to implementing the already constructed sustainable solutions we need.

Price of Water 2017: Four Percent Increase in 30 Large U.S. Cities - Brett Walton Budgeting constraints for utilities from reduced water usage inhibit capability for infrastructure management and repair, opening a niche market for network wide cost-saving measures while forcing utilities to seek revenue from other outlets.

How One Water Agency Thrived During the Drought - Tara Lohan Digging into the data in order to restructure internal cost and profit models allows this agency to survive financially and even surpass state-wide mandates on water consumption. 

Entrepreneurship & Strategy

Interview with Marc Andreesen: Masters in Business - Bloomberg Sitting down with Marc Andreesen of Andreessen Horowitz, discussing what they look for in prospective investees, their selection process, how they differentiate, and a fascinating look at tech history in Silicon Valley.  

7 Lessons from 100+ Failed Startups - Anastasia Mudrova The in’s and out’s of firing a new hire or any employee that just doesn’t meet your/the firm’s expectations. The takeaway: don’t wait.

It's Never Too Early to Fire - Lars Dalgaard The in’s and out’s of firing a new hire or any employee that just doesn’t meet your/the firm’s expectations. The takeaway: don’t wait.

Other Stuff We Liked

Bids don’t only happen in auctions - how subtle signals shape our relationships - Sebastian Bailey The psychology of building relationships (business and personal) and how to get the most out of them.

Roger Moore died: This anecdote about the James Bond actor shows why he’ll be missed - Christopher Hooton Have you smiled today? 

IH2O Accelerator Companie

How this ex-pool boy is changing water - Tedx Talks Ravi Kurani tells his story along with that of several others regarding the diverse roles of water and how changing the way we think about this resource can impact health in communities anywhere.

Chris Turnbill-Grimes (CEO, 3BL Enterprises - IH2O '17) masterminding the installation of a last-mile piped water network for 750+ families

Chris Turnbill-Grimes (CEO, 3BL Enterprises - IH2O '17) masterminding the installation of a last-mile piped water network for 750+ families

3BL Enterprises- We Need Your Help! - 3BL Enterprises 3BL is on track to finish their pilot project of structuring a water pipeline through the city of Wita, Ethiopia, but have run in to more demand than they bargained for. Check out their inspiring work and help support an IH2O company!

Let us know what you’re reading. Or, send us a note when you have news to share with the IH2O community. We look forward to it.

Follow Imagine H2O on Twitter and Medium

The New Precision Targeting Sales Model for the Water Industry

Lead generation, and indeed the sales model in general, is a huge challenge to water startups. Ask any entrepreneur or investor about their concerns in the water sector, and the slow pace of sales to utilities is bound to come up. WatrHub (IH2O '14) have a novel approach to solving this problem. The CEO Ahmed Badruddin explains more. Enjoy.

---

The U.S. water infrastructure deficit is staggering. According to AWWA, over $1 Trillion Dollars is required over the next 20 years in the U.S. to upgrade and maintain the current water infrastructure. Technologies and solutions exist to address water infrastructure needs at lower costs than projected. However, they are constrained by the existing industry structure and sales models.

The water industry is complex. 5,000+ water technology companies navigate a highly fragmented market of 70,000+ water & wastewater utilities that collectively spend over $100B per year maintaining and upgrading the U.S. water infrastructure. For these companies, it is a humanly impossible task to track and analyze opportunities hidden within 70K+ utilities.

Therefore, historically, two primary sales models emerged in the water sector. The first one is the Reactive RFP model that relies on monitoring RFPs (Request For Proposals), going to market through rep firms, and waiting for the phone to ring. The second is the Shotgun Sales model that relies on building direct sales teams that travel the country, county to county, utility to utility, tradeshow to tradeshow, in pursuit of opportunities.

WatrHub has introduced a novel, disruptive approach called the Precision Targeting model, which leverages data analytics to enable water technology companies pinpoint their most promising water utilities at the right time. This targeted approach increases their win rates and shortens sales cycles to ultimately give water technology companies a 38% lift in their sales budgets.

1. The Reactive RFP Model

In this model, water technology companies sign relationships with regional rep firms across the country. Each rep firm may have 3-5 individual reps, so with 20 rep firms, the water technology company gets up to 100 sales people on the ground. The reps travel around their territories, call on utilities and engineering firms, develop relationships with local utilities and engineering firms, and identify potential water infrastructure projects that are being specified.

This model has several key benefits for a water technology company. Without incurring significant sales and marketing overhead, the company can benefit from valuable local market insights and relationships that the rep firm has nurtured over many years. With lower overhead, they can extend their reach into the fragmented water utility market since most companies don't have the sales resources to have eyes and ears wherever opportunities are brewing in the market. Reps are paid on a commission basis that typically ranges from 5-9% (but can be higher), so there is a perceived lower risk for water technology companies. Each sales manager in the water technology company typically manages 10 rep firms and his/her job is to support them.

The downside of this model is that the water technology company is one step removed from their end users. Without a direct relationship with end-users, they are left with waiting for the phone to ring to hear about opportunities or when an RFP is posted. At that point, they can largely only compete on price. Because, if a company is only hearing about an opportunity at the RFP stage, they are already too late. Most of the specifications have been decided. This leads to low win rates and significant market blind spots. 

Besides finding out about opportunities too late, there is also the issue of competing for the rep's time and energy. The reps could be selling anywhere from 12-40 other company's products in their line cards. When the water technology company launches a new product, there are significant training costs and efforts in supporting reps to sell the new technology, as well as lunch & learns with engineering firms to raise awareness to hopefully get specified.

While this model provides the benefit of lower overhead, the water technology company has little control and visibility over the sales process

The Shotgun Sales Model

In the Shotgun Sales Model, the water technology company has its own direct sales team that pursues and engages with potential utility clients. The sales people are paid base salaries in addition to commission and are directly responsible for identifying and closing opportunities. This means higher overhead for the water technology company, as they must pay base salaries regardless of sales performance. Most of the qualified leads come through tradeshows, referrals, advertising, and the sales person's relationships.

The benefit of this model is that the water technology company has more control over its destiny. The direct client relationships are not owned by a 3rd party rep firm. Sales people can focus all their time selling the company's product, instead of being one of dozens of companies on a line sheet. They can develop relationships with target utilities and decision makers early in the municipal buying cycle, increasing the probability of winning the project. With dedicated focus, they can best articulate the water technology company's value proposition to potential prospects. Sales commissions are lower than those paid to rep firms so the overall sales budgets can be up to 11% lower. 

On the flipside, sales people are a limited resource in the water industry. Significant industry knowledge, sales skills, and relationships are required to be successful at selling to water utilities. The territory assigned to each sales person typically includes several states, and hundreds of potential accounts. It takes time to build relationships with these utility prospects. There is high travel costs to support these road warriors as they spend 50% of their time travelling. As a result, many years and millions of dollars are spent chasing dead-end leads because of the vast number of utilities are out there, and the time and effort required to qualify a lead and build the relationship.

This model provides the the water technology company with more visibility and control over the sales process, however, it is expensive and "hit-or-miss" because of how fragmented the water industry is.

WatrHub Precision Targeting Sales Model

After several years of studying the sales process of hundreds of companies in the water sector, WatrHub has proven a data-driven Precision Targeting approach in identifying high potential water/wastewater utility prospects, which is a leap-forward in shortening sales cycles and increasing close rates.

Essentially, Precision Targeting means focusing sales effort on the most promising water utility prospects, at the right time, with the right sales strategy. Previously, this was unattainable because of obscure sales channels, fragmentation in the water industry, and limited data availability.

However, all of these 70K+ utilities are required to make filings spanning water quality reports, permit documents, budgets, capital plans, council meeting minutes, discharge monitoring reports, and more. Every year, utilities generate millions of public filings in thousands of data sources, that were largely just filed away. WatrHub's software algorithms aggregate and analyze this overwhelming amount of data to unlock new, timely insights in the water industry. We can now preemptively answer questions such as: Which municipalities are now more likely to adopt an AMI solution? Which utilities will be replacing their underground pipes next? Which wastewater treatment facilities have aging equipment that is due for replacement? Which water utilities are at risk of not meeting their water quality standards?

Armed with these market insights, sales teams in the water industry are focusing their sales efforts on their most promising prospects at the right time, ultimately increasing their win rates and shortening sales cycles. Even when working with 3rd party sales rep firms and distributors, these insights are being used to more effectively align and motivate these firms to sell the water technology company's products.

From a water utility standpoint, it means more refreshing and engaging conversations, and a collaborative, data-driven approach to technology decisions.

For our industry, it means faster and more proactive connections between needs and solutions, which will ultimately lead to better outcomes for our water infrastructure.  

Ahmed Badruddin is the CEO of WatrHub Inc., fast-growing Big Data company that has intro-duced a novel, analytics-driven approach for water industry firms to pinpoint high potential water utility prospects. Ahmed is regularly invited to speak at national water industry conferences. Prior to WatrHub, Ahmed worked in various technology leadership roles at Microsoft, where he incubated novel data systems. Ahmed has a Bachelor’s of Applied Science from the University of Toronto in Electrical Engineering.

5 Reasons a Prudent Water Utility Engineer Cares About Apparent Water Loss

Valor Water Analytics won our Water Infrastructure Challenge in 2015, and has since gone from strength to strength becoming the partner of choice for Utilities across the country to get the most our of their networks through the application of data science. Christine Boyle, CEO, shares reflections on a key topic for Utilities - Water Loss. Enjoy.

---

I think about apparent water loss every day, but not every water utility professional does.  I want to highlight 5 reasons all water utility engineers should care about apparent water loss, so we can further the discussion on how to get the most out of our water networks.

1) Apparent Loss is Under collection of Revenue to Which Utility is Entitled

According to Water Research Foundation, apparent losses in American water utilities account for annual water loss of 58,774 MG and annual financial loss of $489M (on average).  With over $3.2 trillion in water infrastructure investments needed to modernize our nation’s decaying pipes, tunnels, and reservoirs, money from resolving apparent losses can go a long way.

To boot, water utilities in California took a large revenue hit during the drought. By simply addressing apparent losses, up to 5% of total operating revenues can flow back into the utilities’ operating budget.

2) Apparent Water Loss introduces Degree of Error in Quantifying Customer Consumption

We have seen examples of concerns over error in measuring demand due to meter inaccuracy in places like New York City where a large supply tunnel is scheduled to go off line for repairs, and city officials want to verify that they can meet demand through the other two tunnels.  The question they must ask themselves is this: Is the metered estimation of customer consumption accurate enough for them to plan for decreased supply?  That is, do they trust the reads of the over 800,000 meters that provide customer consumption data?

As New York City officials fall in to the prudent category, they are engaged in multiple projects to make sure their measurements are correct.

3) Apparent Water Loss Can Impact Credit Rating

As the credit rating agencies get more sophisticated in how they assess water utility credit, they are now using revenue protection measures, data from water loss audits, and revenue risk factors into consideration when they make a credit determination. Ceres has a great series of articles on this topic. Water loss rates are mentioned throughout. 

4) Regulatory Compliance: GA & CA (Water Stewardship Act and SB 555)

According to the water audit gurus, Will Jernigan and Steve Cavanaugh, mandatory water loss reporting is steadily making its way through the nation.  As of 2014, 10 states had water loss regulatory or policy framework per AWWA M36 method. In 2017, this number approaches 15 states. Lucky you if you reside in one of these states as you can rest assured that your utility operators are working hard to deliver you clean and affordable water with state regulators overseeing this effort.

States with water loss regulatory/policy framework per AWWA M36 method (in red)

States with water loss regulatory/policy framework per AWWA M36 method (in red)

5) Customer water leaks can be better detected with accurate meters.

Customer side water leaks can lead to property damage, wasted water, and unnecessary high bills. A recent study conducted by East Bay Municipal Utility District in Northern California found a relationship between meter inaccuracy and failure to detect small customer water leaks.  With more accurate meters and meters that read at a smaller gpm resolution a utility can detect smaller customer leaks. With a communication plan, customers can receive a notice and take corrective action. 

Conclusion

Apparent water loss is smaller in gallons but is important as it impacts customers and utilities’ bottom line.  Valor Water is leading the industry to make apparent loss detection more cost effective.  Stay tuned or contact us to find out more.

Read my last blog post on A Brave New World for Apparent Loss Detection here.

---

Like what you read? Drop Christine a line and let her know if you agree at ceboyle@valorwater.com. Next week, Ahmed Badruddin, CEO of WatrHub (IH2O '15) shares his perspective on precision targeting for sales in the water industry, a real pain point for entrepreneurs and technology salespeople everywhere.

 

 

World Water Day: Celebrating What's Possible

Arable Labs (IH2O '17 Water Data Challenge Runner-Up): Helping farmers and businesses reduce food waste with smart crop and weather sensors.

Arable Labs (IH2O '17 Water Data Challenge Runner-Up): Helping farmers and businesses reduce food waste with smart crop and weather sensors.

On this World Water Day, we at Imagine H2O have reason to be optimistic. Every day we witness the ingenuity, perseverance, and technical prowess of entrepreneurs as they unlock promising, new solutions to a water-scarce future. With a front-row seat to water innovation, Imagine H2O is taking today to highlight progress, success and global impact.

World Water Day is also certainly an opportunity to raise awareness and reflect on the formidable challenges ahead. We should use today to mobilize civic engagement about water conservation and the plight of those without access to clean drinking water. We should encourage collaborative partnerships between government and business that help strengthen the resilience of our communities in the face of climate change. However, the urgency for action is constant—not just on World Water Day. It is an existential struggle as much today as it is every other day of the year.

Since 2009, Imagine H2O’s portfolio companies have overcome obstacles to build their businesses and drive adoption by customers in agricultural, industrial, and municipal markets. These companies have deployed solutions to urgent problems that radically improve the quality of water accounting and management globally.

Just this year, Ignitia provided weather analytics to 100,000 smallholder farmers in West Africa. Apana helped 80+ large retailers across North America reduce water usage by 20 percent. Ayyeka installed remote infrastructure monitoring tools in over a dozen countries, laying the groundwork for water-smart cities. ANDalyze tested lead and other contaminants in school districts across the United States.

ignitia100.jpeg

These endeavors are part of Imagine H2O’s multiyear water data initiative, which harnesses better decision making to monitor and manage our water resources more effectively. It’s built on the premise that water data innovation helps farmers do more with less, informs infrastructure upgrades to reduce waste and improve access to underserved communities, and provides real-time monitoring of water quality.  

Imagine H2O remains committed to dismantling the barriers to water innovation. And today, rather than highlight the challenges ahead—of which there are many—we want to celebrate the efforts of the entrepreneurs who are developing, launching, and scaling groundbreaking water technologies in markets the world over. We want to recognize the more than 700 people who have applied to Imagine H2O’s program as well as the 80 companies that have been supported through our accelerator.

Most of all, we want to highlight the 12 promising water data startups selected to participate in our 2017 accelerator as they give us hope that the future for water resource management is brighter than ever before.

Learn about Imagine H2O's 2017 portfolio companies here.