Fund I - What I learned

Anders Hallsby looks back on Fund I

As we close Mazarine’s Fund I it is a good time for some personal reflection regarding what I have learned over the last 4 years about venture investing in technologies that address challenges in water and wastewater. Coming from the corporate world, with many years of experience working to develop and commercialize new technologies in the water space, some of what I found was expected, but other aspects caught me by surprise.

Anders Hallsby, PhD, is a founding Partner of Mazarine

The founder is key!

The founder is core to the success of any early-stage company, but due to some of the unique challenges of investing in “water-tech”, for Mazarine the founder is absolutely critical. There must be a strong sense of urgency, a willingness to listen to advice and a sense that we are “stewards of water”, and what we do is important not only to create a successful enterprise, but because it is good for everyone.

Know thy customer!

“If you build it, he will come” …. It has surprised me how many technology companies seem to believe that just because their innovation is “better” than what is already available, customers will come knocking down the door. Selling a technology that addresses some aspect of water inefficient or risk is, in most cases, not like offering a product on Amazon combined with an online promotion. In addition, many water-tech innovations will compete with alternative ways to accomplish a roughly equivalent end result.

It is critical to invest the time and effort to understand the target customers, the specific use cases, the tangible value the innovative solution brings and who makes the buying decision (“get a PhD in the customer”).

Working with fellow investors

Spending many years working in “water” the term “water-tech”, has a very distinct meaning to me. However, I have come to realize that water-t

ech means something different to everyone, ranging from “designer” bottled water to atmospheric water and nutrient removal from wastewater. As a result, water-tech investing is a confusing term, and, as we all know, “If you’re explaining you’re losing”.

A key driver for innovations that address water inefficiencies and risks is changing quantity and quality of water, and the associated increasing risks for individuals, as well as for the public and private sectors. Climate change is driving many of the changes in water quantity and quality, and connecting water tech to climate tech is helping to bring clarity.

It has been interesting to note how often “shiny objects” seem to entice investors who are not specialized in a particular topic area. The investment community also sometimes appears to demonstrate a lack of understanding of both the technology, adoption cycles and customer drivers, leading to investments that do not meet expectations.

Engaging corporates

The ultimate customer for many of the innovations addressing challenges in water and wastewater are either the sellers of water (ie utilities) the users of water, or the providers of offerings (equipment/consumables/services) for processing water. It is unfortunate the degree to which large users or providers neglect investing the time and resources required to encourage and support external innovation.

On the flip side, many of the small technology companies do not have the skill sets and/or experience to successfully work with and leverage the capabilities of a large, complex organizations.

More on Fund I here.