The technological innovation that powers water and wastewater treatment processes — like new membranes for produced water cleanup or desalination technology for stressed water systems — is largely what drives the industrial and municipal treatment industries forward. And a new funding trend may spur even more innovation.
“Water technology startups are turning away from venture capital and seeking financing, partnerships and other development support directly from large strategics rather than financial investors,” Forbes reported.
The analysts behind the report noted that this transition can have lots of positives for technology producers and, therefore, the treatment operations that put their products to work. By partnering financially with those who see these innovations as part of their own business — rather than venture capital firms primarily interested in profit — there’s a higher chance that these tech startups could be acquired by their partners. These types of partners also typically have greater industry reach and could potentially spread the innovations in places where they are needed more quickly and widely.
“For example, desalination company Forward Water Technologies’ CEO Howie Honeyman … is working on commercializing its technology through a partnership with an oilfield service provider,” per Forbes.
To financial analysts, this seems like a natural transition for technology providers in the water and wastewater treatment space. Such treatment is key to a wide range of industrial processes as well as in the municipal sector, so there are very large markets hungry for new innovations that can make these processes faster or cheaper. With a strategic partner, the technology can first be applied to a specific application, then shared more broadly with the larger market.
“Early-stage companies are not well positioned to take advantage of the opportunities on their own, even with VC funding,” according to the report. “Equity investments, joint ventures, channel and sales partnerships, and other deal structures can all allow startups to target a specific market initially. Once a technology is proven for a specific application, a company may be better able to self-finance commercialization for other applications.”
To read more about the technologies utilized for water treatment, visit Water Online’s Drinking Water Treatment Solutions Center.
Image credit: "DMC-FZ18 - P1010390 - 2008-11-28 22-30-01," Guilherme Torelly © 2008, used under an Attribution 2.0 Generic license: https://creativecommons.org/licenses/by/2.0/