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.
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