Milwaukee Water Tech Startups: 3 Themes to Watch

1/13/14Follow @XconomyWI

If Milwaukee is going to successfully evolve from a 20th century “Rust Belt” city into a high-growth economy, it will need innovative companies in diverse sectors that play to the region’s strengths.

One key sector that has received plenty of local attention and resources the past several years is water. It’s an industry that I knew I wanted to follow closely when I joined Xconomy last month.

To kick off that coverage, I have written a series of profiles of local water-tech startups that were accepted last year into a seed accelerator program at the Global Water Center, a downtown Milwaukee incubator that houses startups, researchers, and R&D teams from larger water-related companies. The center was opened last year by The Water Council, a Milwaukee-based water industry group.

The four companies in this series were:

Microbe Detectives, which is applying DNA sequencing to water quality monitoring and wastewater treatment.

H2Oscore, a software company that partners with utilities to help homeowners track their water usage and encourage conservation through discounts to local businesses.

Vegetal i.D., a “green roof” company that is working on a system that could help storm water management agencies avoid floods and sewage overflows.

Noah Technologies, which has developed a home device that detects water leaks using radio-frequency technology, electronically alerts homeowners and apartment managers, and sends a signal to a valve that closes off the main water pipe.

In my interviews, I noticed three common themes that present both challenges and opportunities for the entrepreneurs:

1. Funding concerns. The accelerator program provided each startup with a $50,000 grant from the Wisconsin Economic Development Corp. to cover startup costs. Now it’s up to the companies to sink or swim financially. H2Oscore founder McGee Young told me he’s working on a financing round that he wants to close in the next month or so. Vegetal, meanwhile, has the benefit of being owned by a parent company in France that is backing its operations here.

Not every startup looks for outside capital, though. Noah Technologies co-founder David Rice said his bootstrapped company is turning a profit, thank you very much, and the founders don’t necessarily want to give away a stake in the company to investors at this point.

2. Competition (or, in some cases, a lack thereof). This is an obvious challenge that every startup faces, and it’s no different for most of these companies. But in the case of Microbe Detectives, the startup is essentially creating a new market, founder Trevor Ghylin said. The application of genome sequencing to water quality testing is relatively uncharted territory in the research world, let alone the commercial one. Is there an untapped market here, and will his company capitalize on it? Or is it too early?

3. Collaboration. Participating in the seed accelerator program has obvious benefits for the startups, from snagging office space to getting business-model training. But the benefit that the entrepreneurs kept coming back to was the value of being co-located in a building filled with water industry experts, peer startups, and other support organizations. For example, Vegetal was able to validate its cloud-technology approach in a meeting over lunch with researchers at Veolia Water North America, who have operations in the center. And Noah Technologies’ Rice was approached by a mechanical engineer who thinks he can design a simpler, cheaper valve for the startup’s system. It’s difficult to quantify the value of these individual conversations, but the entrepreneurs said they take place daily and give this group of startups an advantage in their endeavors to build thriving businesses.

This initial series of profiles was meant to give readers a deeper look into some of the ideas germinating in the Global Water Center. I intend to keep an eye on these startups, while continuing to watch for interesting stories in Milwaukee’s water tech scene.

Jeff Engel is the editor of Xconomy Wisconsin. Email: jengel@xconomy.com Follow @XconomyWI

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