Why Silicon Valley Has Only a Trickle of Water Startups
With 58.1 percent of California parched by what the state calls “exceptional drought” conditions, you might think that the Silicon Valley entrepreneurs who claim to be hungry to solve big problems would be all over it.
The venture capital community that’s so good at creating business software and social media companies isn’t geared to tackle sporadic, potentially devastating problems — mainly because they don’t promise high returns on investment. Hence the dearth of water-saving technology companies in Silicon Valley.
Much of the more innovative work in water technology takes place in Israel, Australia and Spain, where consistently scarce water makes it a more valuable commodity to build companies around. Still, the Bay Area has spawned a handful of companies whose technology can help businesses, farmers and households save water.
Steve Westly, the former California controller, state gubernatorial candidate and current CEO of an investment company, has placed bets on Silicon Valley’s indigenous water tech.
He says it’s possible to find smart investments, especially in software companies, that develop products that can be deployed quickly to save water.
His Westly Group took a stake in San Francisco-based WaterSmart, a software management program that recommends usage goals for people based on individual profiles. He says software water managers can together produce the same conservation net effect as new physical infrastructure.
“Think about what it would take to expand the nation’s water supply by 10 percent,” Westly said. “That’s a daunting challenge. That’s building 1,000 dams, reservoir plants and desalination plants. What would it take to save 10 percent? (Software) is a cost-effective solution and we know how to do that right now.”
The Santa Clara Valley Water District is trying to nurture water-saving technologies through a $1 million fund created as part of a state ballot initiative,Jerry De La Piedra, the district’s unit manager for water conservation, said.
On Sept. 30, the district will issue a request for proposals from companies that want to develop water saving technologies and will distribute $250,000 of the larger fund.
“What we’re trying to do is ID companies that have potential to scale and have big impact,” said Teresa Alvarado, deputy administrative officer for the district.
The current drought has potential to dent California’s economy by as much as $3 billion if the next 12 months’ precipitation is as paltry as the last 12 months’ rain, said Richard Howitt, professor emeritus at U.C. Davis’ Center for Watershed Sciences.
Silicon Valley may dodge most of the damage — for now.
“It will be a heavy, heavy hit on the agricultural economy,” he said. “What will happen in terms of Silicon Valley won’t be much because the Santa Clara Water District is among the best in the state and has adjusted.”
The district on Sept. 23 voted to bolster water-conservation measures, saying existing programs haven’t made enough progress.
We surveyed the Bay Area startup scene to find companies working on technology that might help ease water use during the current drought. They range from high-tech thermal imagery services to modest, innovative ways of bundling water utility upgrades.
Meet the players below.
A mobile app designed by Redwood City-based Dropcountr creates water conservation reports for communities based on metrics gathered from utility partners.
Dropcountr CEO Robb Barnitt said the goal is to make users understand the magnitude of their behavior changes when they adopt water-saving habits.
“For example, does it make sense to cut a minute off your shower or your shaving time?” Barnitt said. “We want to give people that level of intelligence as to where your water goes.”
Dropcountr is free for customers (on iOS) but paid for by utilities. It measures factors including gallons per person per day tracked against household occupancy. There are also metrics based on parcel size and square footage of households. The app chooses different events to highlight a need particular to each household.
Union City-based mOasis has created a soil additive called BountiGel that maximizes crop outcomes with minimal water.
BountiGel looks like a pack of sugar but is actually made out of a hydrophilic polymer with high levels of water absorbance and the ability to hold 250 times its weight in water. That means water can be retained in the root zone of a plant and make nutrients more readily available instead of evaporating, according to CEO Steven Hartmeier.
According to mOasis, growers who use the polymer spend $150 per acre and receive between three and five times in return on their investment. Hartmeier claims California clients already are producing healthier, bigger versions of high-value crops like tomatoes and strawberries.
On Sept. 5, the company started a Series B round of funding that will close sometime in the next 60 days.
Root Systems, based in Sunnyvale, gathers data on the moisture and temperature of soil and air using small, nail-shaped sensors dug into a field.
The startup combines this data with software that builds optimal irrigation schedules. The product promises to help farmers reduce water use.
Root CEO Sai Arora says the science behind the predictive analysis of evapotranspiration is what makes Root stand out. Evapotranspiration, the rate at which water evaporates through the leaves and ground, is affected by variables like solar radiation, humidity, temperature and soil moisture. Root uses these factors to predict when soil will become dry.
Root currently works with four partners for its pilot program, including U.C. Santa Cruz Extension. It is funded by Plug and Play Ventures.
Started by a former U.S. drone-warfare soldier, Dublin-based TerrAvion uses high-resolution cameras placed under a Cessna plane to take visual, thermal and infrared images of crops to determine their water health.
The company’s subscription service, a report delivered once a week, imports the images into a live Google Map that farmers zoom in and out of to get detailed information to help plan irrigation. Each image has color-coded areas that help identify problems down to individual vines. Before this service, farmers relied on workers to sample vines on foot. Other thermal imagery services can take 2-3 times longer than TerrAvion and cost a lot more.
Customers pay TerrAvion close to $30 per acre, per year, to take pictures of farms measuring less than 300 acres. TerrAvion was backed by Y Combinator.
WaterSmart, based in San Francisco, produces personalized water reports for utilities by combining customer consumption data with property assessment and weather data.
The reports estimate the amount of water used by dishwashers, showers and lawn watering, and make suggestions based on what can yield the biggest efficiency gains.
The WaterSmart system has two software portals: One for customers and another for utilities. The customer portal has real-time meters that send leak reports and an area where customers track the progress of their conservation efforts. The utility portal figures out which households use more water than most, which use the least, and provides data that utilities can use to answer customer questions.
The East Bay Municipal Utilities District recently ran a six-month study of WaterSmart and found positive trends, including an improvement of 5 percent in overall water efficiency.
Desalination is another way to make fresh water without depending on the rain. Desalination uses vacuum distillation to separate salt from water and has been used in countries with few natural water resources.
Energy Recovery, based in San Leandro, makes desalination devices called pressure exchangers. The ceramic-lined tubes are placed in the path of high-pressure seawater streams in the desalination reverse-osmosis process that, through a rotor that can go up to 1,200 rotations per minute, captures and transfers hydraulic energy to low-pressure feed water with 98 percent efficiency.
Because these rotations create energy without power, ER says energy consumption of seawater “is drastically reduced.” Recovering energy from desalination plants is important during droughts because they have high pressure-pump flow requirements.
Energy Recovery has installed more than 15,000 devices, covering 90 percent of the market. Gross margins jumped from 28 percent in 2011 to over 60 percent in 2013.
Yaniv Scherson, founder of Stanford-based wastewater treatment company NGEN, believes Silicon Valley is a great place for water innovation because it creates disruptive products. And few businesses starve for innovation as much as energy-hoarding water treatment facilities.
“Thirty to 60 percent of the energy budget of U.S. cities (cover energy use of) wastewater treatment facilities alone, and 3 percent of all U.S. energy supply goes to the treatment and transport of wastewater,” he said. That’s about the same percentage supply produced by solar and wind energy combined, nationwide.
NGEN has a solution: A process where treatment facilities can produce as much energy as they need to power them. It converts ammonia, a nitrogen-rich polluting agent found in wastewater, to a nitrous oxide that transforms to energy power output. According to NGEN, it is the first process to ever recover energy from nitrogen.
Upgrades to one treatment facility to handle high levels of nitrogen discharge can cost up to $125 million. NGEN says its process can do it for $3 million to $5 million.
The CEO of Portola Valley-based Ladera Labs, Mark Williams, says his Smart Garden lawn irrigation control manages water distribution more efficiently than traditional controllers.
Smart Garden uses hardware and software to find microclimate events, like temperature and humidity, to calibrate the amount of water needed in a specific location. Customers install the hardware on the sprinkler system controller and the software takes care of the rest by managing data picked up by the controller. Smart Garden uses Amazon’s cloud service for storage and the real-time Weather Underground website to resolve weather changes.
Each unit is sold for $300 and can cover multiple zones in residential and commercial areas. Williams says they’ve converted most of their free trial beta users over the last year to paying customers.
Ladera Labs is a self-funded company, aside from $50,000 received as part of the Alchemist Accelerator program. The founders all have backgrounds in electrical engineering and software design.
This post originally appeared in The Silicon Valley Business Journal.