The Green Frog from Silicon Valley

The second generation of water technology innovators in Israel

Two months ago, I gave a talk in Silicon Valley on proven and emerging water technologies in the Middle East. As the population grew rapidly in the last century, the Middle East became an early adapter of new desalination solutions. To date, over 50% of the world’s reverses osmosis (RO) plants are deployed in this region.

On my flight from Israel, I remembered when I was first exposed to desalination as a child. My father, Haim Cohen, worked on the first desalination pilot plant outside the US in the 1960’s to provide drinking water in the Negev desert. Close to fifty years later, I joined a new water treatment company, Emefcy, after a first career in IT start-ups. It is fascinating to me how much the two projects have in common despite being half a century apart.

Australian untapped pool of innovation

Today is World Water Day and it does not get as much attention as Earth Day. Water is arguably the biggest challenge that we are facing ahead and it is tightly connected to climate change. The decrease in fresh water reserves and the rise of population has shifted the balance from abundance to scarcity. The end of abundance has far reaching implications around the world and across industries.

It is an opportunity for Australia to shine on the international scene. When it comes to water scarcity, the country down under has experienced droughts for decades that other countries are only experiencing now. Provinces like Victoria have smartly engaged the public opinion and everybody feels concerned, from consumers at home to researchers in their lab. The spur in water innovation has, however, not translated yet in many investment deals. Why investors are not tapping down more into this pool of opportunities?

Investments are flowing into smart water

The flow of venture investments in water tech companies is slowly increasing. The CEO of Pasteurization Technology Group (PTG) just closed a $1M seed round for a green double play. The investment was announced during the 3^rd Water Tech Summit in Santa Clara, CA. Greg Ryan, PTG's CEO, was meeting with other entrepreneurs along with financial investors, industry professionals, and consultant engineers. Water is one of the cleantech sectors expected to grow in 2012.

An increasing number of water tech companies are positioning themselves at the intersection of water and other sectors to get more bang for the same buck: avoid costs to deal with contaminated water liabilities and create a new revenue stream. In the case of PTG, they generate renewable energy from biogas as they heat water to clean it. They use a capital-light model that VC investors like. However, they found their lead financial backer in Canada where the summit was held last year. The US is not necessarily the smartest country to deal with water and Silicon Valley is not the water innovation hub in America.