Acumen Fund investee WaterHealth International (WHI) announced earlier this week that it had closed a $15M round of financing from the International Finance Corporation. The financing - combined with WaterHealth’s Series D round of funding - will enable the company to bring purified, disinfected water to 3 million more people in more than 600 Indian villages (in addition to the 200 in which they currently operate).
Naturally, we at Acumen Fund are excited to see WaterHealth continue to grow up and out, serving more and more base of the pyramid customers with a critical service. But what’s even more interesting - and encouraging - is the range of co-investors that have stepped forward to support WHI. There’s Dow Venture Capital and SAIL Venture Partners; Johnson & Johnson Development and Plebys International; Dr. Anji Reddy and Acumen Fund. And now, with another huge commitment, the IFC.
We believe in building systems rather than one-off solutions or projects. Who doesn’t? Unfortunately, the process of international development aid grantmaking and monitoring seems to lend itself better to “new” and “pilot” projects - a grant to support something “innovative” or “paradigm-shifting” has a better chance of winning than one to support a “small, struggling - but growing - business”. Donors tire of the same old, boring projects - they want new ideas! - and funds shift around to the cause du jour.
Not so with investing, at least not in this case. WaterHealth International has been at this for 12+ years (it was founded in 1996). If WHI were a traditional development project, it would have had to re-apply for funding at least 4 times (the average development aid grant runs for 3 years). But as a company, WHI has been able to raise angel, Series A, Series B, Series C and now Series D rounds of funding, all based on financial and operational results. And after 12 years of learning, re-learning, adapting, adjusting and innovating - a process that continues - WHI is beginning to reach real scale.
Is WaterHealth International perfect? Some argue that its UV Waterworks technology is too expensive, and that reverse-osmosis filtering is a better BoP-oriented solution. But you can’t argue with results - millions of customers today, millions more in the next few years. And with the IFC dedicating $100M to “infraventures” (infrastructure projects in low-income communities), we’re beginning to see real progress in a space formerly dominated by top-down government and aid projects. I’ll raise a glass to that.
Tags: Scale, water, WaterHealth International
What’s cheaper - UV treatment or reverse osmosis treatment? Well, the truth is, UV is usually cheaper then RO, but it all depends on the scale. Very large plants can treat water for next to nothing per liter, but this kind of infrastructure doesn’t make sense for small or remote villages. But the smaller the scale, the more expensive per liter. That’s because you have to consider not just the capital cost for equipment, but also the maintenance and operating cost. We also believe you have to think of water as a service, not a manufactured product, and the cost of quality assurance, marketing and communication, delivery etc. effects the cost, and hence the price. The best question is not always - what’s the cheapest option, but rather, what’s the right technology given the water quality available, what’s the right scale, what’s the right delivery model, and finally, to make all of this affordable, what needs to be subsidized so that the safe water is accessible to the poorest.
Reply to YasminaWhile going through the investment process is probably better than the traditional non-profit funding, it is still probably not the best route. The VC process in itself is flawed (too expensive, not so good returns), and you should consider other means for financing. I have gone through the details of the issue on my blog here http://bizcoach.blogspot.com/2008/06/more-info-on-vc-funds-i-have-shared-my.html, and I offer a solution through the Entrepreneur Commons http://www.entrepreneurcommons.org that I would love the Acumen fund to consider this option…
Reply to Marc DangeardThe next step should be to integrate the water needs of the animals. Animals play a huge part in BoP living and economics. Most of these animals have limited access to water which limits their productivity, reduces the loads they can carry, the milk they produce, etc. Something as simple as catch basins to collect the run off or waste water from water purification/ distribution sites could make a big improvement in what these animals can do for their humans. Education is key too as so many people have lived with little water for so long that they believe that most animals don’t need water or very little. Its akin to us running a car with a half empty radiator and rationed amounts of gas.
Reply to Myriam Kaplan-Pasternak