Startups innovate in access to water, but run into managers’ lack of interest
Brazil holds 12% of the planet’s fresh water. But how is it used? Not for the entire population, certainly. Almost 35 million Brazilians do not have access to potable water and about 100 million do not have sewage collection. Startups focused on water resources could help solve this crisis, but they face age-old problems, such as political ill will and little investment in environmental ideas.
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These startups attack on several fronts of the problem: from equipment that purifies certain types of water in isolated regions to software that detects leak points in a piped network.
However, the startups heard by the Canaltech report said they had already encountered problems already known by other companies in the govtech branch . They face bureaucracy with bidding processes, lack of interest from investment funds and almost no incentive programs. Not to mention the specific pains of the sector, such as the technical and financial difficulties to develop the solutions or sell them in a scalable way.
Box that filters 5,000 liters of water per day
The São Paulo company PWTech, which started its operations in 2019, is an example of this. Created a water purification system with a unit cost of R$ 10,500. The 12 kg box is able to remove 100% of the level of viruses and bacteria from untreated fresh water — that is, in its natural stage in rivers and lakes — and reduce up to 99% of solid particles. Its treatment capacity is up to 5,000 liters of water per day, and it relies on several energy sources, including solar panels.
In these three years, PWTech was recognized by the NGO BrazilLab and accelerated by programs from Ambev and the city of Curitiba. But the startup founder, chemical engineer Fernando Marcos Silva, admits the obstacles to growth. “I thought the equipment would be quite logical to use in Brazil, but one kilometer from my house there are 8,000 people without access to drinking water. There is no point in such a business. Water is everyone’s right, but our difficulty is create this market”, he says.
Silva says the solution is simple and cheap, but it depends on the interest of companies and governments to buy it and supply it to needy communities. Often, they end up resorting to more immediate solutions than their device. “The guy who is in the semiarid doesn’t have the money to buy something like that. That’s why I say that our biggest competitor is not other startups in the sector, but the gallons of mineral water and water trucks”.
Design clean water with sunlight
Currently, PWTech, whose initial investment was around R$ 1.5 million, received the investment fund Fram Capital as a partner and is in the process of evaluation to receive more contributions. A situation far from the reality of the most promising fintechs in the country, such as Nubank and Ebanx, but even more comfortable than SDW, a water startup created by award-winning Bahian biotechnologist Anna Luisa Bezerra.
At the age of 15, still in high school, Bezerra began to develop Aqualuz in Salvador, a technology to treat water in rural areas with sunlight. SDW was created by her to develop the idea of quenching the thirst of communities in the Brazilian semi-arid region, a dream she has nurtured since reading the book Vidas Secas , by Graciliano Ramos. “I began to understand this problem of drought and became even more frustrated, as it still happened in places not so far from where I lived”, she recalls.
In 2019, Bezerra won the Young Champions of the Earth award from the United Nations (UN) for creating Aqualuz. Today, SDW has four other technologies in its portfolio, such as Aquapluvi, a pedal-operated washbasin installed in Salvador; and Aquasalina, to clean brackish water, still under development. In 2021, gross revenue was almost R$ 1 million.
But despite the good history and references, the startup has so far manufactured only 920 units of Aqualuz and has not received large contributions. “We received some proposals but none were enough to give up equity , it would be a very low value. It would be more advantageous to take a loan than to give part of the company”, he says. Like PWTech, the company is putting governments aside to focus on B2B, on companies that want to enter or expand into sustainable projects.
Sensors to find leaks
Stattus4, based in Sorocaba (SP) since 2016, works with several ideas in smart cities. For the water sector, there are two solutions. The first is 4Fluid Mobile, in which field teams use sensors to collect evidence of water loss. The data is sent to an artificial intelligence system to conclude if there is indeed a leak. The second is a fixed version of the same system, which collects data on vibration, consumption and water pressure for a given region.
The company has worked with more than 150 water distribution companies, such as Companhia de Saneamento Basico do Estado de São Paulo (Sabesp), Empresa Baiana de Águas e Saneamento (Embasa), and Companhia de Saneamento do Paraná (Sanepar) , which serves Paraná and the Águas do Brasil group. Its annual revenue is around R$ 4.5 million and it has already received R$ 2 million in investment.
But the company has its challenges, as expected. Mainly in the culture of managers. “Sometimes we get easy access to financing at better rates because it is a socio-environmental project. But we need to work on this to break the bureaucracy. You need to convince that person, who has always worked that way, that the use of technology can help them to achieve even better results”, says Marilia Lara, CEO of Stattus4.
Why don’t these startups accelerate for good?
Bruno Rondani, CEO of the open innovation platform 100 Open Startups, believes that comparing water startups with other niches needs to take context into account. “In all other sectors, we already see market-leading companies with their innovation ecosystem programs, and in sanitation, the leaders started doing this just a year or two ago, such as Iguá, Sabesp and BRK Ambiental. recent”, he argues.
For him, another point that hinders the growth of these companies is that many are created by people with a technical profile, and not an entrepreneur. “These people were formed in a generation of the ecosystem that paid little attention to the business model. Thus, larger companies, which also have more resources to invest in R & D [research and development], advance further”, he says.
Still, Rondani hopes that reality will soon change. “We are now starting to form an ecosystem in this sector. The opportunities multiply and then we will reach more spectacular numbers, as happened with the financial sector. In four or five years we think the scenario will be very different”.