Month: April 2024

Ginger Rothrock has led HG Ventures’ investments in a number of water-focused startups, and has built a reputation as a leading expert in the field. Ginger was invited to attend and speak at the Global Water Summit in London, and here summarizes some of the key issues and trends in that sector.

“I want security, yeah

Without it I had a great loss, oh now

Security, yeah

And I want it at any cost, oh now”

       – Otis Redding, “Security”, 1964

In April 2024, the public and private sectors convened in London to discuss the rising challenges and opportunities of deploying technologies that may help them adapt and build resilience to the changing climate, manage growing demand, and ensure water quality: At least 69% of the impact of climate change is expressed through the water cycle. The Global Water Summit, “where water meets money,” was the ideal place to convene and converse about capital strategy and market trends.

HG Ventures has been investing in water-related technologies since our inception. Our focus has been in the industrial sector, where The Heritage Group’s environmental services businesses work with large companies to create sustainable manufacturing and waste reuse practices. Wastewater valorization, in-facility water reuse, and the treatment of contaminants such as PFAS are key areas of innovation and opportunity.  I attended the Global Water Summit this year to develop and build relationships with financial partners for our venture team, and potential customers for our portfolio companies looking to make water actionable.

Corporate risk from water insecurity and the opportunity within

Businesses use twice as much water as households, which is a tremendous opportunity for innovation and deployment but also a point of insecurity. Most industrial processes use water as an input, and those industries that spend the most on managing water are also the ones most exposed to water risk.

The largest volumetric water users are industries familiar to The Heritage Group – power generation, oil and gas, chemicals, and mining. Other significant users are food & beverage, textiles, and CPG–and businesses in many of these sectors are Heritage Group customers.

Global Water Intelligence (GWI) reports that currently around 3% of corporate capital expenditure goes towards water-related infrastructure and systems. But that figure is likely to grow as natural disasters such as drought and flood become more prevalent.

Technology driving increased information around water quality and associated human health are leading to regulations, requiring investment. The capital markets play an important role in financing a sustainable water system and will shift to backing businesses with effective water security.

Specifically, the venture capital sector can benefit from investing in solution providers. GWI predicts that the total capital employed in water security-related assets will rise from $3.8 trillion today to $12.6 trillion in the next ten years, an increase of more than 300%.

Key themes and opportunities for water security

We see strong momentum for the water sector and for innovations that build water security and resilience. Some of the key themes and opportunities voiced by water leaders across the corporate world include:

• Water availability: Water reuse and fresh water “creation” from desalination have the potential to make clean water unlimited. GWI reported that $10 billion is spent every year on running desalination plants, with more plants commissioned every month. We know from our customers that in-plant water reuse has financial benefits beyond the sustainability story: The water used from processing can be more easily controlled, additives in the water can be used more frequently, and the costs associated with treatment and discharge decrease dramatically.

  HG Ventures has invested in automated solutions that monitor and treat contamination, enabling the compliant discharge and economical recycling of industrial water: Electramet removes heavy metals from process water using an automated membrane-free and chemical-free process. ZwitterCo, meanwhile, is deploying fouling-resistant membranes that treat challenging organic and salty streams, focusing on product purification and chemical reuse.

• Water process efficiency: Hardware and software solutions can improve the productivity of water management and treatment systems as well as proactively provide cost avoidance.

  HG Ventures portfolio company, Transcend was in attendance at this year’s Summit, showcasing its software that automates the engineering design process for water treatment facilities. Design automation was a hot topic at the Summit among the public and private sectors; asset owners want to understand and weigh options in risk, carbon footprint, and cost before they build facilities. Another hot topic was the circular economy (one of my favorite investing themes). Wastewater can be valuable to mine for energy (from heat or emitted gasses), excess raw materials, or additional manufactured product.

• Water quality: With the first national drinking water standard for PFAS released just days prior, the Summit was abuzz with discussion around the new rules that test the limits of detection, capture, and treatment technology.

  Those in the water ecosystem are increasingly concerned about the purity of water for industrial processes, as well as for public consumption. Maintaining and measuring good quality water is essential. For PFAS alone, GWI estimated an investment of $250 billion in Europe and North America to eliminate these substances in drinking water down to the detection limit. Alternative new technologies that can cost-effectively remove and destroy PFAS are necessary to bring that cost down to attainable levels. HG Ventures portfolio companies Puraffinity (PFAS capture) and Aclarity (PFAS destruction) are focused on meeting that challenge. In truth, there will be many different technologies needed to eradicate PFAS and other emerging contaminants across the multitude of streams.

Water as an emerging asset class

The conference provided ample opportunities for groups across the ecosystem to debate the scale of the opportunity and financial challenges of the sector.

The climate crisis has resulted in attention and investment in the sustainability sector, thus far concentrated largely on decarbonization and energy, while water has historically been an inexpensive, consistent utility, viewed by many as a human right rather than a threat or opportunity. But that can no longer be said to be the case.

No one player will have the solution for water security. Water is inherently a local problem that must be solved with a mix of technology, policy, and investment; integration and collaboration across the markets of water, energy, food, waste and finance is necessary to ensure a sustainable future.

We intend to continue to be a part of that.

Denver-based Vartega is developing a new market for recycled carbon fiber. In this guest post, co-founder and CEO, Andrew Maxey recounts how a curiosity about bicycle frames ultimately became the foundation of a multi-million dollar business.

Carbon fiber is an incredible material. It’s strong, lightweight, durable and extremely versatile. But, as anyone with an interest in bicycles appreciates, it is also very expensive to produce.

That was how my own interest in carbon fiber began: In the late nineties, carbon fiber was all the rage to make bikes stronger, lighter, and faster, and in high school I worked in a bicycle shop in Traverse City, MI. One customer had bought a beautiful carbon fiber bike made by Kestrel, but had forgotten that it was on the roof rack of their car when they drove into their garage. The frame was badly damaged and unfortunately, couldn’t be saved. For all its durability, at that time there wasn’t an obvious way to recycle or repurpose the material. This was doubly distressing, given how energy-intensive the production of carbon fiber is in the first place.

But what was a high school kid going to do about it?

An idea that stuck

Fast forward a decade. With a degree in mechanical engineering and a variety of jobs later, my interest in carbon fiber composites had deepened. I had remained curious about what was so special with carbon fiber and why it was so expensive to produce.

The call of the Rockies led me and my family to Colorado, where I was recruited to work for a startup that was processing textiles without water. It was there I learned that carbon fiber is really a high-value textile, and how different it is from traditional materials like steel, aluminum, and titanium.

After successfully helping commission two US domestic prototypes and deploying the company’s first commercial system in Korea, I got into midstream oil and gas, with a desire to help the energy industry become more efficient and sustainable. I soon began to realize that the equipment and techniques used in oil and gas processing could be leveraged for other materials processing, including carbon fiber composites.

My interest was piqued, so I decided to do some market research and soon learned about the massive waste issues in the composites industry. There were some pioneers recycling carbon fiber utilizing a thermal process called pyrolysis but not much had been done with chemistry. My hypothesis was that a suitable chemistry could be used to do the heavy lifting to recycle carbon fiber composites. So, I decided to clear out the garage and start experimenting in my spare time.

As with testing any new hypothesis, this led to several surprises and insights as well as many failures. Eventually, I stumbled across a set of process conditions that showed promise.

In 2014, Vartega was born and I began recruiting the help of friends and former colleagues to take the idea to the next level. I undertook additional market research and came to understand the supply chain challenges associated with composites recycling. I was convinced of the market need and that we were on to a potential solution. Additional development led to a better understanding of the customer problem and the unmet demand for low-cost carbon fiber for high-volume applications in the automotive industry.

Breakthrough

Our real breakthrough came with the innovation of densifying recycled carbon fiber into a format for use in thermoplastics. This is our patented EasyFeed bundle format, which is being used as a lower cost and more sustainable alternative to virgin carbon fiber in cars, consumer electronics, sporting goods, additive manufacturing, and many other applications.

Our partnership with HG Ventures

I first met HG Ventures at a SXSW event in the early days of getting our business off the ground. It was some years before we were ready to take on outside funding, and throughout that time, the HG Ventures team remained in contact, and remained encouraging of our journey.

So, when the time came to raise a serious seed round, we wanted HG Ventures to be part of it.

That investment enabled us to scale our production capacity by a factor of 10 and move into a new 82,000 sq ft facility last year. It was a significant upgrade from the origins in my garage, and a world away from the bike shop.

These days, carbon fiber is everywhere, from the dashboard of your car to the wind turbines you may drive past, to the airplane flying overhead. So, not only is the market opportunity for our recycled product significant, so too is the chance to make manufacturing more sustainable.

To find out more about how Vartega is elevating supply chains and using the earth’s resources more responsibly, contact: info@vartega.com.

Europe is a hotbed of innovation, and the Hello Tomorrow global summit in Paris has emerged in recent years as one of the cornerstone gatherings of those working on game-changing technologies. HG Ventures’ Nick Arnold shares his take-aways from this year’s event.

The 9th Hello Tomorrow global summit, in Paris, brought together more than 3,000 attendees and 100+ speakers from around the world for a two-day program encompassing advancements in energy transition, clean mobility, the decarbonization of manufacturing and construction, climate resilience, healthcare, advanced computing and more.

Of particular interest to me, representing HG Ventures, was the Global Startup Challenge, which is a centerpiece of the event and featured entrants with innovative concepts for making our economy more circular and solving many of the world’s more complex challenges. I could not help but be impressed by the passion and determination of these entrepreneurs, and excited by the future potential of some of these technologies.

A European Ecosystem Promoting Excellence

HG Ventures has made a number of investments in European startups, and as we have explored this region, I have been impressed with the strength of the technology ecosystem. Many of the industry bodies that foster connections within that ecosystem were represented at the summit, including the Deep Tech Alliance, which promotes collaborations between startups and corporates; and the European Innovation Council, established by the European Commission and with a budget of €10.1B to support game-changing innovations from early stage research, to proof of concept, technology transfer, and the financing and scale up of start-ups and SMEs.

The European Institute of Innovation and Technology (EIT), meanwhile, is a collaborative network designed to break down barriers between sectors and connect academia, business and innovators. The EIT Community, with its visionary initiatives, serves as a dynamic force driving innovation and entrepreneurship across Europe; together, these entities form a powerhouse of support for the next generation of disruptors.

Emerging Trends in Deep Tech

Hello Tomorrow provided a glimpse into the future of deep tech, highlighting key trends shaping industries worldwide. Of great relevance to HG Ventures, it was encouraging to see sustainable construction and infrastructure emerge as focal points, with an emphasis on carbon-neutral practices and eco-friendly materials.

Additionally, efforts to bridge the critical mineral supply gap through recycling and alternative materials garnered significant attention.

The growing corporate commitment to sustainability, which is particularly evident in Europe, underscored an increasing willingness to invest in environmental solutions, signaling a promising shift towards a greener economy.

The Hello Tomorrow global summit serves as a rallying point for innovators, investors, and ecosystem builders alike.

On February 27th, 2024, we convened an action-packed conference of thought leaders who share a vision of a future for roads that is safe, efficient and sustainable. Meghan Hunt organized the event on behalf of HG Ventures and provides key takeaways from the day.

We’ve been talking about The Future of Roads for over a year and it was incredible to see this event come to life. We wanted to keep the conversation going following our Future of Roads report published last November, and we shaped the agenda around many of those topics.

To ensure we put on a successful and well-rounded event, we worked closely with experts across Heritage Construction + Materials (HC+M) and The Heritage Group, who we often collaborate with for diligence, pilot opportunities, mentorship, incubation support and more. The enduring value these relationships bring to the New Ventures team is vital. HC+M has always embraced new technologies and we continue to work together to do our part in accelerating infrastructure innovation.

Our shared goal was to address road infrastructure challenges and opportunities with a diverse group of stakeholders, including entrepreneurs, investors, academics, and leaders across government and the private sector. Speakers talked about more sustainable and durable materials, the incorporation of electrification, management of autonomous vehicles, technologies to improve flow and reduce traffic accidents, and artificial intelligence.

The event also allowed us to shine a light on how entrepreneurs are disrupting the status quo, featuring several of our infrastructure-related startups (Pretred, Valerann, and Avenew). The connections made and the resulting potential opportunities have exceeded my expectations, and the feedback from attendees has been phenomenal.

For anyone interested in this conversation around road materials and technologies, we’ve compiled a Future of Roads event summary, which we’ve released as a supplement to our Future of Roads report. The following takeaways are an excerpt from the event summary:

• A lack of funding is a major challenge. With fuel tax revenues diminishing, states are having to find new ways to fund infrastructure. While there will likely be a record number of federal transportation initiatives announced this year, there is unlikely to be any additional major federal funding for infrastructure for another 5-10 years. Technology has a vital part to play, with collaboration necessary between government agencies and the private sector.
• But innovation is happening. Many state DOTs are partnering with technology firms to trial innovations including smart infrastructure, data analytics, autonomous vehicles, alternative materials, and the use of drones, all with the aim of improving both safety and sustainability, while minimizing congestion. Digital tools are transformational in maintaining the roads of the future, from policy through construction.
• Startups are driving innovation. In many cases, startups are leading the way, innovating in areas as diverse as data analytics, sustainability, and funding and project management. Public-private partnerships and further collaboration between the tolling industry and tech companies could improve infrastructure solutions, advance transportation technologies, and improve data utilization.
• Improving the sustainability of road construction and maintenance is a goal shared across the industry. 94% of U.S. roadways are made from asphalt, which is the country’s most recycled material. Major corporate road users such as FedEx are linking sustainability to business goals and making investments in electric vehicles, sustainable fuels and renewable energy sources.
• Indiana races ahead. Indianapolis is the racing capital of the world, so it is no surprise that innovation fuels organizations like the Indianapolis Motor Speedway and Andretti Global.
• This is just the start. Attendees left energized about future collaboration to bring about a better future for our roads.

This event was all about building relationships to help move the industry forward. We can’t wait to see where this road takes us.