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Stuart Garfield
Friday, December 12, 2008
Water tech firms pooling into a new N.E. tech cluster
By Efrain Viscarolasaga
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The surge in clean technologies and concerns about the global habitat have spurred a deluge of new companies focused on creation, filtration and desalination of the world’s most abundant liquid — water.
In New England, a cluster of new startups focused on water technologies has been gradually developing, and investors are watching with a wary eye. While some companies have been funded, the numbers have not been as grand as in sectors such as solar or nanomaterials. However, industry insiders and investors say there is a growing market opportunity for the right kinds of water-focused companies.
The two newest entrants into the sector — Clean Membranes Inc. in Cambridge and Oasys Water Inc. in New Haven, Conn. — bring different approaches to water filtration, but represent the new class of water technology companies hoping to attract investor attention.
Both are developing water filtration technologies that can convert waste water or saltwater streams to usable water. Clean Membranes is developing a new nano-based polymer material for use as a membrane, which filters impurities of water based on the size of the impurities. Officials at Oasys did not return phone calls, but CEO and founder Rob McGinnis said at a recent MIT Enterprise Forum event that the company is working on a forward osmosis system that uses considerably less energy than traditional systems.
While both companies are looking for funding, they can point to two other local water technology firms for validation. ZanAqua Technologies Inc. in Hudson, N.H., and Environmental Operating Solutions Inc. in Bourne, both received funding last summer ($1.25 million and $1.29 million respectively).
The funding numbers for such technologies have been modest because of the unique industry. Much of the customer base is made up of small municipalities, both in the U.S. and abroad, which makes for a different customer set than typical technologies.
“Municipalities are very risk adverse to new technologies,” said Trent Yang, founder of Clean Membranes, which was recently spun out of MIT.
While investors are cautiously optimistic about the industry, history comes into play as well, said Jim Matheson, a general partner at Flagship Ventures in Cambridge, which has yet to invest in a water technology company.
“Innovation and startups are going to be needed in the industry, but it’s been a place where it is difficult to make money,” he said. “The good news is that in New England, we have as good a cluster as anyone in the world.”
The market, however, cannot be ignored. After launching a new practice dedicated to water technologies in October, Lux Research of New York recently projected the “hydrocosm” of water technologies and related products could reach $961 billion by 2020, up from $566 billion in 2007.
Other companies in the sector include: Windsor, Vt.-based Seldon Technologies Inc., which makes household water-filtration systems using nanotechnology; Blue Hill, Maine-based Hydro-Photon Inc., a maker of a portable water purifier that uses ultraviolet light; and Waltham-based Rainwater Recovery Inc., which makes fairly low-tech systems for applying residential rainwater to irrigation. All three companies have landed small amounts of funding in the past 12 months.
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