I am currently the chair of the Isle Group. Isle is a specialist consultancy firm with around 100 employees worldwide. Isle aims to help water utilities identify and adopt new technologies and innovations. I have a background in Environmental Science and received my first degree in the 1980s, after which I had the opportunity to do a PhD in public health engineering. Since then, I have worked in the water sector for over thirty years. I have had the opportunity to work for water utilities, on the supply side and at an investment company. I worked for both a contractor and a consultant on the supply side. I can safely say I have seen the water sector from all angles throughout my career.
In general, utilities are very technically competent. However, they often struggle with being caught within conservative and risk-averse organizations. Moving innovation forward in these organizations involves a lot of bureaucracy and many challenges. Looking at the supply chain, you again have many extremely technically competent individuals. However, they are culturally very different, mainly because they do not have the water utilities’ surety of existence. A water utility can be fairly certain it will be around for the next fifty years, while a water supplier is faced with the constant challenge of staying solvent. There is an urgency in supply companies to keep making sales and push things forward to distinguish themselves from the competition—through innovation, for example. And then you have the third group: the investors. Investors are generally not technically competent; they are not engineers or scientists; their objective is to deploy capital and get a return on their investment. As you can see, these key players in the sector have remarkably diverse characteristics.
All three have slightly different perspectives on innovation. To the supply chain, innovation is their lifeblood. It is their way to stay ahead of the competition. Utilities, on the other hand, love to talk about innovation, though many of them do not understand what innovation is. Being innovative means taking risks and being prepared to fail. Innovating means that you will fail more often than you succeed, and this is the opposite of how utilities generally operate. Investors generally don’t like innovation because it entails risk. Not all investors are created equal, of course. Venture capital investors focus on taking risks and getting an appropriate return on investment. However, most investors are private equity or growth equity investors looking for proven business models that they know will work.
There are two ways to answer this question. Firstly, by looking at the things that we have to work on. The energy crisis is an example and challenge involving micropollutants and leakages. Upcoming technologies are another. For example, how we can turn the available data in the sector into operational wisdom. And these are just a few points. There is no shortage of challenges that require great entrepreneurs advancing exciting propositions to help us better manage the limited water resources around the planet. The second way to answer your question is by looking at the biggest challenge for innovation, which is a cultural challenge: getting innovations adopted within the water sector globally instead of constantly doing more trials. It can take literal years for a technology to move from trials to adoption in the sector.
Yes, the initiative was launched last year to address this specific problem. But let me be clear. I understand why utilities are conservative and risk-averse. If you rush forward with a new invention without properly testing it, you risk contaminating the water supply or polluting the environment with disastrous consequences. The water sector is naturally conservative, and for a good reason, but that is no excuse to keep running trials endlessly. A trial should be designed carefully and with clear criteria. If you meet the criteria, the trial is successful, and we—the end-user—will adopt the technology. Trials are currently conducted without any thought to the follow-up process; only when we get the results do we start thinking about the actions we will take in response.
The trial reservoir is a fund available to utilities and supply chain companies to finance trials. The only thing you have to do is be clear about your next steps after a successful trial. If the trial is completed and does not meet the criteria, the trial reservoir takes all the financial consequences. If the trial is a success, there is the expectation that the end-user will adopt the technology, and the technology company can return the money that they borrowed from the trial reservoir. This translates to an evergreen pot of money that can fund trial after trial—and get utilities to adopt innovations.
Yes, it is a worldwide initiative. We launched it in November 2021, and it is going phenomenally well. We have around 80 trials in the process. The first of them kicked off last month, and I expect to have five or six up and running by the end of April. But the process takes time. You have to negotiate the terms with the technology provider and end-user. We have been asked to present the initiative at the World Economic Forum in Davos, and it will be the topic of one of the papers being presented.
You are causing a phenomenal splash in the water sector for a relatively small country. You have a glorious reputation. The Dutch water sector is undoubtedly a leader in technology development and innovation worldwide. There is a difference between the Netherlands and other hubs, such as Israel and Singapore. For Israel and Singapore, it is about national security. Water is critical for all countries, but Israel and Singapore do not have the certainty that they can rely on their neighbours. Historically, both countries’ governments have made decisions that ensure that they are leaders in water. That is not the case in the Netherlands. That raises the question of why the Netherlands is so brilliant and influential in water technology globally. I do not have the answer to this. Is it because of your education system? Is it the fact that water is part of everything you do due to the geographical situation in the Netherlands? I don’t know.
There are many of these water hubs around the world. They often have distinct reasons for existing. They are often set up to attract entrepreneurs to the country to employ local people and, in turn, generate tax revenue. And then you have Water Campus; WaterCampus is all about technical excellence and has made the creation of technically brilliant solutions its primary goal..
There is a balance between technical, commercial and people management. People are generally not brilliant on all three of those. If you are brilliant at one, you compromise on others. I would not encourage WaterCampus to weaken the technical excellence you have going. That is a massive differentiator for you. The commercial stuff can be brought in, but do not change course from what you are doing. The entrepreneurship programme you have developed is a good example of introducing commercial expertise without negatively affecting the technical side.
Yes, Isle has the Technological Approval Groups (TAGs). Isle staff are continuously scouting for water tech start-ups. Since we started, we have seen over 11,000 innovative technologies. Six or seven start-ups present themselves to a TAG group at every TAG meeting. Based on the end-user’s challenge, we hold a selection procedure to select the start-up with the best solution for the end-user. These sessions usually involve midterm challenges and, therefore, later-stage start-ups (TRL 7–9). I understand what you mean, though. Various international research forums are available, such as the World Water Innovation Forum Isle is running. For earlier-stage start-ups (TRL 4–6), or even PhDs, it might be interesting to present during the WWIF and get feedback from the involved utilities. I would love to investigate this further with you.
First of all, it is good to realize that there are different types of investors. A start-up generally has no revenue stream and often has to work on technology development. Venture capitalists or “business angels” are the investors most interested in this target group. On the other hand, scale-ups already have commercial success and are looking for money to grow. Growth money is usually private equity. Start-ups and scale-ups have to be aware of this and make sure they talk to the right investors. Private equity investors are always interested in talking to start-ups, although they already know that they will not invest in this stage. They want to know what might be coming down the line and will allow you to present your pitch even though there is no match.
There is a shortage of venture capital investment funds in the water sector because the water sector is terrible at adopting new technologies. Unfortunately, there are many examples of VCs backing brilliant technologies but ultimately stepping out because the sector was too slow to adopt the technology. Investors do not mind investing in start-ups and technologies that initially look promising but do not pan out. They do mind investing in technologies that prove viable but are not adopted by the end-users. I have made it my life’s work to solve this challenge. The Trial Reservoir we discussed before is a part of that.
A successful start-up needs three things: a product, market and team. The product is relatively straightforward, although many entrepreneurs have a great idea but no product. The product needs to work, stand out from the competition, be robust, etc. The second thing is the market; it needs to be substantial. The beauty of the water sector is that a solution that works for Amsterdam will also work for New York, Sidney and London. Water utilities are fairly similar all over the world. Last is the most subjective and important of the three: the team’s capabilities. If you are a young entrepreneur, the one thing you cannot say is that you have done it before. How can you deal with that? Surround yourself with people that have done it before. It’s nice to know what you excel at, but it is far more important for a good entrepreneur to know where their weaknesses lie and to strengthen the team with people who have those competencies.
Ronald Wielinga has worked as entrepreneurship manager at WaterCampus Leeuwarden since July 2020. Every month, Wielinga interviews inspirers who play a prominent role in entrepreneurship or the water technology sector.
He uses these interviews to reflect on and strengthen the WaterCampus’ entrepreneurship programme, which has strong ambitions for growth. The interviews can also be found online at www.wateralliance.nl and are also regularly published in WaterProof magazine.
For more information, contact Ronald at +31 6 121 38 876 / firstname.lastname@example.org.