The View from Silicon Valley Future Water Technologies, Markets & Investment Opportunities Developing Future Water Technologies - Membranes Dr. Burton H. Lee PhD MBA Managing Director, Innovarium Ventures Lecturer, European Entrepreneurship & Innovation, Stanford School of Engineering Burton.Lee@innovarium.net VTT Technical Research Centre of Finland Helsinki, Finland June 8 2011
Topics Water Venture Investing Today Water Markets Key Drivers of Innovation Today Barriers to Venture Investment in Water Key Conferences and Other Resources Lessons for Finland June 8 2011 2
Speaker Background June 8 2011 3
http://www.europeanentrepreneursatstanford.com June 8 2011 http://me421.stanford.edu 4
European Partner Countries, Regions & Companies Speakers in Stanford Engineering ME421 Graduate Course 2009-2010 - 2011
Innovation Ecosystems Key Elements Core Institutions and Roles Research Universities and Institutes Foundations Corporate R&D Labs Startup companies Venture finance Angel networks, VCs, Corporate Venture Groups Corporations as Customers Corporations as Acquirers (global) Governments as Customers (procurement) Governments as Funders of research Markets Intellectual property / technology transfer Talent Management, Technical and Investment Investment seed and early stage capital Products Services Exits Informal Innovation Communities, Networks and Stakeholders Entrepreneurs, Angel investors, advisors, hackers and other networks Government National, regional and municipal; pan-national Service Providers Law firms, Accounting firms, Market research firms, Commercialization consultants and June 8 2011 brokers, Product design firms 6
Water Venture Investing Today Silicon Valley and USA June 8 2011 7
Source: Presentation by Laura Shenkar, Artemis Project, Blue Tech Innovation Forum, June 8 2010 8
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Artemis Top 50 Companies Announced May 2011 Top 50 are active in the fields of infrastructure solutions (18) water and wastewater treatment (23) wastewater recovery solutions (9) By geography, the Top 50 are from the US (31) Canada (7) Israel (7) Australia (1) Denmark (1) Ireland (1) Luxembourg (1) and The Netherlands (1) End markets Energy-efficient wastewater treatment Smart grid water management Biosolids conversion to energy Pollutant biodegradation and Reverse osmosis desalination Infrastructure management June 8 2011 Wastewater recovery Source: http://artemistop50.com/ 25
Venture Capital Firms with Interests in Water Investments Venrock Lux Capital Chevron Technology Ventures Alexander Hutton Venture Partners (AHVP) XPV Capital Bessemer Venture Partners Bunker Hill Capital Allegis Capital June 8 2011 26
Venture Capital Firms with Interests in Water Investments SAIL Venture Partners Chrysalix Energy Venture Capital Draper Fisher Jurvetson Early Stage Partners Emerald Technology Ventures Element Jerome J. Frank Investments Kinrot Ventures Kleiner Perkins Caufield & Byers (KPCB) Leaf Clean Energy Fund Virgin Green Fund Ecomundi Ventures June 8 2011 27
Water Markets June 8 2011 28
Source: Presentation by Matthew Nordan, Venrock, Blue Tech Innovation Forum, June 8 2010 29
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Source: Presentation by Matthew Nordan, Venrock, Blue Tech Innovation Forum, June 8 2010 31
Major Water Markets Desalination Services Water treatment Wastewater treatment Energy recovery from wastewater Equipment Bottled Water Biosolids to energy technologies June 8 2011 32
Hot Areas in Water Today Smart Water / Smart Infrastructure Growing area of focus for VC and corporations Produced Water Advanced desalination Decentralized Treatment and Re-use Energy-related uses/treatment of water Resources Recovery from Wastewater June 8 2011 33
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Drivers of Innovation in Water June 8 2011 38
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Innovation Drivers in Water Markets Cost Equipment costs Operating costs New Technologies and Designs Economies of scale Improved performance New capabilities Scarcity Sea water desalination Waste water reuse Reduction in water supplies Regulatory Compliance Water safety Infrastructure Decay Climate Change Water Safety June 8 2011 40
Barriers to Venture Investment in Water June 8 2011 41
Source: Presentation by Laura Shenkar, Artemis Project, Blue Tech Innovation Forum, June 8 2010 42
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Water Markets Investment Challenges Very slow innovation cycles Conservative customers Late/slow adopters Strong public safety focus retards rapid adoption Strong preference for proven demonstrated approaches Unattractive business models Water as a public right Heavy government involvement Mixed public/private participation Incorrectly functioning markets Pricing mechanisms often dysfunctional, inconsistent Little history of innovation in water Administrative vs innovation culture has been lacking June 8 2011 50
Considerations for Venture Investors Exit markets? Where are these strongest? Which corporations? Which geographies? Good, and strengthening Where are the major corporations investing? GE, IBM, Veolia, Grundfos, etc Absence of a mature innovation ecosystem in water Institutions, programs, culture Risk levels Legal/policy/political Market adoption Technology Financial What is the business case for investment and customer adoption? June 8 2011 51
Source: Presentation by Matthew Nordan, Venrock, Blue Tech Innovation Forum, June 8 2010 52
Key Conferences and Other Resources June 8 2011 53
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Lessons for Finland June 8 2011 60
Key Takeaways for Finland Focus research on technologies that Support scalable businesses Can go global Target markets where customers show evidence of early adoption Are complementary to existing technologies and businesses deployed by major corporations And hence, may be attractive for acquisition and/or investment Caveat Above venture investment data and outlook is primarily focused on the US market June 8 2011 61
Q & A June 8 2011 62
Working in Silicon Valley, Europe, Latin America and Washington DC Senior financial, technical and strategy advisory services for global technology innovation organizations Professional Services Technology startup and growth companies Interim CXO and Advisory Board roles Expert guidance & decision-making at the interface between market/customers, technology and finance Business development industrial and government Business plan preparation/research/review; Government Grant proposal preparation/review Coaching and mentoring of CEOs and other CXO-level managers Assistance with government regulatory and policy agencies Angel, venture capital and private equity Investors Fund strategy, team selection and market positioning Due diligence: technical, financial, strategy and business models Public and non-profit R&D laboratories Technology transfer & partnerships; venturing and spin-out of companies; strategy and business development; grant applications Research universities Innovation-related models, policies and practices Technology transfer and licensing; industry partnerships and relations; development and strategy; grant applications National and regional government agencies Innovation policy formulation, analysis and review; cluster development strategy; economic impact studies Science & technology policy formulation, analysis & review: space, aviation, nanotechnology, software/ai/robotics, manufacturing Selected recent clients US/European technology startup companies alternative energy, robotics/ai, software, Internet, nanotech Venture and private equity funds aerospace, nanotechnology, ICT, computing, advanced materials, clean tech Office of the Prime Minister, Ireland; European Commission; National Science Foundation; NASA, National Academies Dr. Burton Lee PhD MBA, Managing Director Contact: Burton.Lee@innovarium.net Based in Palo Alto, CA near Stanford University Bio/References: LinkedIn Profile Lecturer, European Entrepreneurship & Innovation, Stanford School of Engineering June 8 2011 63