At the Stockholm World Water Week, 26 – 31 August, two sessions I attended discussed the business around sanitation.
The first was a meeting involving ‘Water Innovation’. “The Water Innovation Engine (WIE) was launched in September 2017 as a contribution to the UN High Level Panel on Water as part of Australia’s contribution to the Panel. The WIE’s aim is to promote greater global coordination and investment into water sector innovation to achieve Sustainable Development Goal 6: “Ensure availability and sustainable management of water and sanitation for all”.
During the first year the Water Innovation Engine has undertaken the initial set-up of the Secretariat and the Steering Committee and has led two innovation challenges – the Urban Sanitation and Water Data Initiative challenges.”
The second session was part of the water week, from a session on ‘Container Based Sanitation and the Sanitation Economy‘, specifically the ‘partnering with corporates’ table. The notes are further down this post.
Notes from the business meeting:
To grow: need to create the pipeline to sell the tech
Need the following from funders:
1. Funders serve as impact investors, see the long term investment value.
2. Give more support; operational support, legal support, in kind
3. Be more flexible on deliverables, things – the situation, the market needs change over time
innovate in service delivery mechanisms
1. Can we secure the customer base? the client base?
2. Procurement: Can we influence procurement to support innovation? to level the playing field. We need to move towards results-based procurement.
3. Can we learn from other sectors? How do we bridge the gap from start-up to city-wide service delivery? Funding wise there is a difference in requirements for obtaining startup funding and the $500million World Bank loans.
How do we create the pipeline to create the long term customers?
Can we partner with large companies like Suez, Veolia, e.g. through sub-contracting?
Virginia (Loowatt) did that work with Manila: Loowatt supplied the hardware in a pilot and Manila did the rest.
This worked well for Loowatt. But then what about the tranport, processing? Can we partner with solid waste management? What could this look like?
The World Bank is back-financing many municipalities, they can assist with supporting the client, thereby creating the market to realise “City-wide inclusive sanitation”
Look at CityTaps, who provide bulk water, and smart cards and the ‘last mile’ is covered by small entrepreneurs.
beyond a generic terms of reference (not sure on this note)
50 toilets to 1500 toilets.
user-interface – storage – collection – transport – processing
-> There is a need for innovation at the contractor level at the government side.
Do we want to scale? Is it appropriate? And does one company want to do all of these steps? Do these steps need to scale in different ways?
From a funder point of view the funders need scale to be able to allow one person to deal with e.g. $20 million worth of budget. (Not mentioned in the meeting but a response:) I suspect that a more decentral will always be more appropriate for CBS, and a way to complement that with the funders needs, a cooperative model, or middleman, or broker or consortium can be used, which can obtain bulk funding and then distribute that to the individual small companies, in the way that agriculture did when it was first industrialising.
Emily from Sanivation commented that yes, they would like to focus.
There was a comment that donors need less technical information and more ‘reportable’ information – how many served, at what income levels, how many vulnerable women, etc?
Emily from Sanivation commented that it would help if donors can specify what information they need, it is currently a guessing game ‘this one maybe needs women’, ‘this one maybe needs deferred deforestation’…
At the H2O imagine session the example of DrinkWell was used, who partnered with ?? at Dakar?
For innovation: the gap is not at startup level, the gap is at the next stage, what is the role of government? Innovators can’t do the whole chain.
notes from session on ‘Container Based Sanitation and the Sanitation Economy’, specifically the ‘partnering with corporates’ table. Tuesday 14:00
The definition of ‘corporate’ is ‘big companies for profit’ without making a distinction for public or private or family-based.
“Bigger is different” – corporates can help teach CBS about this.
“What does CBS look like at scale?” We don’t know.
The partnership with corporates can lead to focused assistance and longer-term cross pollination
6 points of feedback:
## 1. It seems to us that a critical requirement for regenerative sanitation solutions (like CBS) to reach scale in today’s economies is to partner with corporates, as there are mutual needs that are met.
The needs for CBS partnering with corporates include better access to and management of:
– turnover rates
– health and safety
– product development
– know-how about how to scale an idea
– distribution globally
– BRAND power * this is maybe one of the biggest early benefits
– trust with government
## 2. The BRAND power of the established corporate partner may be one of the biggest early benefits
The needs of corporate that can be met with partnering with CBS include:
– experience in this space
– knowledge on the user interface, contributing to user-centred design
– get expertise in this new, emerging area.
– employees get new skills, e.g. ‘entrepreneurial thinking’ how to be more nimble, can move faster in some ways
– staff retention, happier employees, attracting better candidates.
## 3. This needs to be a commercial partnership.
Importantly, the partnership needs to link with core business, it can’t be a CSR initiative, those don’t survive. It has to be a commercial relationship.
## 4. From an investor perspective this also de-risks the investment, due to the strengthening of the skills in running the company.
With the different steps (user-interface – storage – collection – transport – processing) can one corporate partner help with all of these? No. Then what does this look like? Haing too many partners is a problem.
## 5. With scale comes specialisation. Some aspects may need to be ‘spun out’ or follow an exit strategy.
What corporates are suitable? E.g. Veolia may see CBS as a business threat. They focus on wastewater Treatment. Xylem is a ‘pipes and infrastructure’ company – the link doesn’t translate easily into CBS. Of course some aspects may be suitable, in terms of knowing the market and serving the same customer base, but these type of companies are likely not natural partners.
## 6. What are the different partnership options? (time ran out here).
PPPs, probably on a case by case basis but there is significant precedent on successful mergers and acquisitions, not all of them lose their identity or brand. Some are still ringfenced – example of Unilever acquiring Ben & Jerries.