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Michael Kanellos | August 4, 2008 at 10:08 AM 5 Comments

Attention Water VCs: Start Booking Your Travel to Fresno

In the past 16 months, VCs have begun to seek out water deals in earnest. But where do you find them?

Fresno is probably a good place to start.

“We’re sort of the Silicon Valley of water technology,” said Claude Laval, the chairman of Lakos, a filtration company in the city, and one of the local business leaders behind the Claude Laval WET incubator at Fresno State University, which focuses on water and energy start-ups.  “Two of the largest pump companies are here and many of the large irrigation companies are in the San Joaquin Valley.”

Like most other incubators, Fresno State’s serves two purposes. One, it hopes to unlock intellectual property inside the university’s labs. Two, if enough start-ups can make it out of the incubator, the local economy will benefit. The incubator gives the new companies a place to exist and advises them on business models and opportunities. The budding companies leave the incubator after a year or so to make room for new ones. Although some will get VC funding, others will ultimately wither away. It is the way these things work. (The WET incubator is just over a year old; the university, however, has had a more generalized incubator for over a decade.)

Incubators have their supporters and detractors. Some critial VCs note that very few large companies have ever emerge out of incubators. On the other hand, supporters say that the incubation process is a necessary first step toward creating the sort of lab-to-commercialization ecosystem that have caused tech clusters to spring up in Silicon Valley and Boston. Google didn’t come out of an idea session at a VC firm, after all. It came out of the tech transfer office at Stanford, which has been honing its licensing processes for several decades. Israel’s tech industry largely emerged from an effort to incubate local VC firms and companies kicked off in the early 90s.

Fresno State also has the advantage of being near many of the ultimate consumers of any products that might come out of it. The city is the hub of California’s agricultural industry. The incubator also comes with a 30,000 gallon testing facility.

Opened a little over a year ago, the WET incubator has given birth to five companies. Although one is being folded, another PureSense, has received $4.5 million in outside funding, Laval said.

Some other ideas and/or companies that you might see come out of the incubator: chemical processes that can take the smell out of wastewater (the subject of an ongoing research project at the university) and a new way to wash wine barrels.

Although VCs historically haven’t liked investing outside a tight geographic circle, clean tech is changing that somewhat. Many biofuel companies are located in the grain farming regions in the middle of the country. Clean coal is growing up around coal mines. So it stands to reason that water companies will crop up in agricultural centers.

Comments [5]

  • Central Valley Farmboy 08/8/08 12:42 PM

    Dude, can you smell what you are shoveling?

    Why don’t you come out here and show us how it is all done?

    You wouldn’t last a single farming season here doing what you describe above.

    Or better yet, How about you get those BOZOS in SF and SAC to stop FARKING with the Central CA water supply in the first place?

    All over a non-indigenous fish.

    FISH ARE FOOD…NOT FRIENDS.

    Reply
  • greensolutions 08/5/08 6:57 AM

    I have a favor to ask.  Can you guys put quotations around “clean coal” whenever it is mentioned?  Otherwise, I think the phrase gains some unwarranted legitimacy.

    Thanks

    While we’re on the subject of water, I’d like to throw my 2 cents in.  I think that the real solutions to our water challenges lie in conservation, efficiency and on-site processing—much like electricity.
    I see the majority of new ideas pertaining to the supply side and ignoring the demand side.  Most of our water usage occurs on farms.  A farmer can cut water usage to a small fraction of what was previously needed simply by using real compost and adding like a foot (or more) of mulch or interplanting a cover crop.  Obviously, adding that much mulch will not be compatible with every crop, but compost is universally applicable for any crop.  Agribusiness tends to favor the “farmer” who grows crops in dead dirt instead of living soil—this is why so much water, fertilizer, herbicides and pesticides are “needed.”  Cover crops can also be nitrogen fixers, meaning less fertilizers needed on the main crop, meaning less natural gas used to make fertilizers (not that you need to fertilize if you’re using compost!)  Compost holds about six times its weight in water and slowly releases it over time.  Where to get the compost?  Well, tons and tons of compostable material ends up in landfills every day.  Grocery stores throw out incredible amounts of produce that is only slightly blemished.  “Farmers” truck away tons and tons of agricultural waste that could be composted on-site.  (I’m putting “Farmer” in quotations when I refer to an agribusinessman, which is synonymous with “soil miner”—as opposed to a real farmer that works with nature, rather than against it).  Also, the commonly used sprinkler irrigation systems lose up to 70% of their water to evaporation.  With drip irrigation and heavy mulch or cover crop interplanting, the only water losses would be from evapotranspiration through the plants.  Then there’s compost tea and mycohrrizal fungi, further increasing any crop’s nutrient and water efficiency.

    Then, there’s water usage in the built environment.  Again, we need compost, and lots of it.  As climate change progresses, our rainfall patterns are becoming more severe, dumping a greater amount of water in shorter bursts.  To deal with this, we need compost in our municipal, commercial and residential landscaping that soaks up that water like a sponge, filters it, and slowly releases it into the ground over time, thus replenishing our aquifers (this also prevents massive amounts of storm water runoff that results in raw sewage being dumped into our waterways).  This rainfall also needs to be captured with rainwater catchment systems.  These systems should be required by building codes, especially in arid or semi-arid climates.  This would also prevent huge amounts of storm water runoff.  Rebates should be given for residential and commercial constructed wetland systems that filter and release (or make available for reuse) greywater from sinks, showers and laundry.  Toilets should be water-free.  There’s no logical reason to shit in drinking water.  Composting toilets have existed for decades now and can be made very “hands off”  with incineration methods for the feco-phobic.  The non-incinerating composting toilets make a great compost that can be used for all the previously stated uses.  These techniques reduce the need for centralized water treatment plants (they can be much smaller cheaper to operate), allowing affordable wetland-type treatment with UV treatment on the back end (who needs carcinogenic chlorine?)   

    All of these methods combined would give us more drinking water than we know what to do with, drastic reductions in water-related energy use, lower food prices, less strain on municipal budgets, healthier waterways (shrinking and disappearing “dead zones” in the ocean), replenished and unpolluted aquifers, riparian restoration (no diversion for needed for distant agriculture) and probably lots of other benefits I’m not thinking of.  All this would come at a fraction of the cost of massive centralized projects implemented near the point of disaster resulting from business as usual.  New technologies that promise cheap, energy efficient desalination or cheap, energy efficient condensation of water vapor in the air or cheap, energy efficient reverse-osmosis are not silver bullets.  Implementing these technologies without changing our relationship with water would be the same thing as installing many gigawatts of PV capacity to meet our energy needs while continuing to use energy as wastefully as we ever have. 

    Ok, maybe that was a bit more than 2 cents.  More like a couple bucks.  It’s so interconnected though, that it’s really hard to just talk about one thing!

    Reply
  • Craig Scharton 08/23/08 1:07 AM

    Anyone interested in learning about our water or clean energy companies in Fresno should give us a call at 559-292-9033 or send me an email at (JavaScript must be enabled to view this email address).

    We have a venture forum scheduled for October 17th, and in March we will have a venture forum that will focus on water tech exclusively and will have international representation from water tech companies through our network of clean tech incubators.

    Craig
    Central Valley Business Incubator (The Claude Laval WET Incubator is one of our two facilities)

    Reply
  • Christina 10/3/08 5:20 PM

    Dear greensolutions,
    You obviously don’t understand the intricacies of farming.  My brother-in-law’s farming operation uses state-of-the art drip irrigation.  He farms in an irrigation that uses recirculation to not only reduce water use as well reduce the output of certain sediments in drainage water.  That is conservation in action.  Even with all these efforts, he could only plant 2/3rds of his land this year because WATER IS NOT AVAILABLE.

    I’m tired of hearing that conservation is the answer.  It may be part of it, but the truth is tha CA is conserving so much that some cities are turning sewer water into potable water.  They call it “toilet to tap.”  Is that enough conservation for you?

    Also, the idea that farming is the largest water user is completely false.  The largest water user in California is “environmential” i.e. letting it run out to the ocean.  Next is farming, followed by municipal use.

    To be honest, I have a personal stake it Central California farming.  However, my concern goes farther than my personal business interests.  It has been projected by some that famers will get as little as 20% (or even less) than their water allotment for the year.  As the largest agricultural supplier in the world, I expect this is going to have an enormous impact on the prices of food world wide.  And its really too late to do anything about the next few years.  Its going to be ugly.  Food supply will dramatically drop.  Prices will jump.  Farmers will go out of business…  and the cycle wil compound.

    Actions we take now will take time to be effective, but we need to start now.  The smelt problem is very aggravating.  They will go extinct eventually no matter what we do.  However, even if we write off the smelt as a lost cause, farming is still in serious trouble.  We need more storage and we need to start building now.

    Yours truly,
    Christina

    Reply
  • Stephanie 02/4/09 5:39 PM

    Does anyone have any suggestions regarding the containment and purification of the rainfall we do get? I would like to own and run my own vineyard and organic farm one of these days, and considering the serious water shortage we will undoubtedly be confronted with, how can farmers utilize the natural rainfall and/or implement system of technologies to purify water that would be otherwise wasted.

    Reply

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