There is typically far too much optimism around at this time of the year. Here is a contrarian dose of reality with some pre-dictions and pontifications for the year ahead.
IPO markets
European exchanges will remain mostly closed to clean-tech initial public offerings (IPOs) and the more buoyant US markets will mostly welcome only US companies. “I do not see too many exciting companies and IPO candidates in Europe,” said one London-based clean-tech broker who preferred to remain anonymous.
VC funding
There will be no revival in early-stage funding of clean deals from financial VCs. They mostly remain skint. The few that have raised new capital are steering away from early-stage clean-tech companies, which should instead focus on angels, family offices and crowd-funding as a stepping stone to corporate venturers. “The recent downturn in venture capital investing in clean-tech does not mean the sky is falling,” says Dallas Kachan of the Vancouver-based consultancy Kachan & Co. “The dip becomes less threatening when viewed in the histori-cal context of how venture capital always spikes early in emerging categories, later to be augmented with other sources of capital, such as often-unreported corporate and family office investment, as industries develop.”
Coal is not dead
In fact, its endurance is driving the growth of water-tech. Coal contains too much hydrocarbon richness in easily accessible areas with low political risk for it to be neglected. And in many parts of the world, it is not policy or investor sentiment that is curbing its extraction. It is the lack of water. China is an obvious case in point. But new water technologies are coming to market that will enable water treatment and recycling on a much greater scale.
Coal extraction will thereby become more feasible.
“Although much of the dialogue surrounding the water-energy nexus seems to focus on the fact that you need energy to make water and water to make energy,” says Christopher Gasson, publisher of Global Water Intelligence, “most of the business opportunities seem to lie in the premise that as we move towards the twilight of the fossil fuel age, that industry’s wastewater challenges are getting greater and greater. If we can get the technolo-gies right, carbon’s difficulty will be water’s opportunity.”
Extending the nexus
We need to take the water-energy nexus one step further by adding waste. That is because if we assume the econ-omy is going to grow slowly at best or barely at worst, the clean-tech industry simply has to focus on triathlete solu-tions – they must lower costs and increase profitability in water, energy and waste. Innovation in energy alone is not enough. It has to enable water or waste benefits and vice versa. A small company getting this right is Memsys.
A medium-sized one is Cambi. A large one is GE.
Memsys is a Singaporean-German distillation technol-ogy company set to solve the wastewater problems of several industries. It reported excellent results on Texas frack water last year. (Disclosure: Memsys is a client).
Cambi is a privately-owned Norwegian company that is quietly in the vanguard of both Scandinavian corpo-rate venturing and 21st century alchemy – transforming bio waste into power and clean water. For example, the Cambi sludge hydrolysis technology being used to upgrade Washington DC’s Blue Plains wastewater facil-ity is reported to cost $200mn less than the alternative technology, has reduced the volume of residual sludge by 50%, operates on a tiny footprint, and generates 15MW of electricity. Now that is what I call extending the nexus.
GE Water’s suite of membrane and thermal technolo-gies looks ideally suited to the wastewater opportunities arising from the coal, oil and gas industries. Energy Technology Ventures, GE’s corporate venturing joint venture with ConocoPhillips and NRG, has one of the world’s most compelling nexus portfolios.
Happy new year.