ֿDomain: Environment, Off-grid Wastewater treatment
Status reached: Significant research, conversation with potential patent developers and potential investors
When: Nov 2022-Apr 2023
|Team: second-time entrepreneur with a business background
Thesis/Idea
Off-grid solution for domestic (ie, human) wastewater.
I was interested in environmental issues, learned about the damage of untreated wastewater, and got interested in how to better treat wastewater. There are three main categories in the world of wastewater: industrial, which contains mostly chemicals and water; domestic, which is wastewater from consumers and is mostly water; and livestock, where there is a lot of solid waste (suspended and unsuspended, which means “floating over the liquid” or “dissolved in the liquid”).
-A second-time founder I met (similar to my status), who had worked on domestic wastewater in the past, was interested in moving into livestock, so I did some research with him.
-What we learned: Many US states, especially those with a lot of farmers/ranchers, have weak to no regulation – thus lower pressure on livestock wastewater producers to treat it. Also, ranchers don’t have money to spend on fancy solutions, so pricing is, to a great extent, dependent on the fines you can save them. This business model puts you in a conflict of interest with your customers (you would end up advocating for more regulation).
-I decided to focus on domestic, where things are paid for by local government/municipalities. I met with the Arava Institute for Environmental Studies and Arava Power, which had invested in an off-grid solution, already patented and after a successful proto-type deployment, that deals with wastewater, all the way from its raw form and up to a purity level which is needed for agriculture. The idea was to partner with them.
-The reason for off-grid is that working with the municipal infrastructure is challenging. No matter how ‘smart’ your pipe is, there’s still the sunk cost invested in the old infrastructure, and the cost of replacing it.
-Areas that would need an off-grid solution include, for example, bedouins in Israel, rural and underdeveloped areas in Mexico, Morocco, South Africa, India, and China. These are second-world (vs. third-world) communities where municipalities own and operate modern infrastructure in the cities but not in all remote areas, and have some money (and awareness) to provide solutions in these areas.
-The idea was to take the input wastewater, run it through a mechanical separator and then an aerobic bio-digester, and then sell (or hold) the output water (at a quality that is good enough for most agriculture uses).
-The solution: a machine the size of a large car, with solar panels on the roof. You put it over a cesspool that continuesly receives human waste. The machine sucks out wastewater and puts it through the double phased filtering: one is simply gravitational and the other is a series of pipes with algae and bacteria that digest the waste. The result is water.
Why it didn’t progress
-Hard to show value: It’s very hard to monetize the value. In most cases, the current situation is that the off-grid community uses ground water (which they don’t pay for, potentially causing damage to the aquifer) and then pours the wastewater into open land or bodies of water (which also goes unpaid and creates massive damage).
-Basically, to have a market you need to get local government to start paying for something they should pay for, but actually don’t at the moment.
-Not VC money: According to my research and calculations, you could make money in the space, but not enough to build a VC kind of ROI, and therefore not enough to raise VC money. You could potentially go for an environmental backer like the Gates Foundation (they had the “toilet challenge”).
-At this point, I was exhausted and frustrated, and it became clear that the Arava Institute would not be the right partner.
Validation:
-Hard to get to municipalities abroad – they aren’t on LinkedIn, tend to use landlines…
-Members of the community are mostly on YouTube, where they post videos of things that worked for them, do interviews etc.
Key Insights:
-Try to understand early in your journey if your idea is relevant for VC money or not. And know the difference between a business and a startup. Many people, especially in Israel, have a high (somewhat unrealistic) image of tech startups, and the perception that it produces higher financial outcomes.Tech startups also come with a high social status in Israel. Unfortunately, a lot of very good businesses go to waste because they try, and can’t, be a startup.
-Infrastructure projects are rarely the right fit for VC money because of scale. (You build a pipe from Mexico City to a rural community to the east, but that doesn’t help you with the rural community on the western side).
-Even Miya, which is a successful Israeli company in the water space, is about project management (vs. tech).
Research:
- Joined a delegation from Salt Lake City that visited Israel to learn about innovation in the field.
- Spoke with a researcher who had built infiltration pools with 7-layer filters.
- Spoke to a couple of researchers who did academic work.
- Spoke to Wastewater engineers.
- Podcasts:
- Solving Water by Xylem
- (Don’t) Waste Water
- Books: “The Marsh Builders: The Fight for Clean Water, Wetlands, and Wildlife,” Sharon Levy