From Boston to Milwaukee, Lessons in Building Water Tech Clusters

Making a region synonymous with a particular industry requires patience, good timing, money, and taking the right approach to putting those pieces together. The same goes for building the organizations tasked with nurturing said industry.

Take the New England Water Innovation Network (NEWIN), for example. The nonprofit aims to connect the region’s water technology startups with resources that will ease their path to market, while also promoting the area’s ability to spit out water-related inventions.

Founded early last year, NEWIN is trying to bring visibility and support to the local water tech sector by organizing an annual industry conference and a series of startup pitch events, blogging about water company achievements, and helping startups find places where they can test their prototypes. But the small organization has struggled to attract funding (more on that later). As a result, its two full-time employees will transition next year to running NEWIN on a part-time volunteer basis while they try to capture more resources and fine-tune the group’s strategy, says executive director Karen Golmer.

NEWIN’s growing pains, in a way, reflect the progress of New England’s water technology cluster itself: a promising sector that has a long way to go to build the critical mass and stature of other high-tech industries in the Boston area, like biotech and enterprise software.

“Massachusetts has been very successful in growing technology clusters,” says Michael Murphy, director of water innovation for the Massachusetts Clean Energy Center (MassCEC). The key for local water industry supporters is to “continue to organize and sharpen the message. I think that is happening.”

Murphy’s organization has been closely involved in efforts to foster the local water tech sector, a push that began a few years ago with a series of trade missions to Israel, a small country that has fashioned itself into a leading global exporter of water technology, industry observers say. Those visits spurred a water innovation symposium in Boston that has been held several times. All of this ultimately led to the creation of NEWIN to spearhead the region’s water tech cluster, along with MassCEC, one of NEWIN’s financial backers.

The initiative in Massachusetts mirrors similar efforts around the globe in recent years. In the U.S., there are at least 13 water innovation groups, most of them sprouting up in the past four years. They can be found in places with water shortages, such as California and Texas, as well as locales with abundant water resources, like the Great Lakes region.

Water Industry Groups
NameState
AccelerateH20Texas
Akron Global Water AllianceOhio
BlueTechValleyCalifornia
Cleveland Water AllianceOhio
Colorado Water Innovation ClusterColorado
ConfluenceOhio
The Maritime AllianceCalifornia
Nevada Center for ExcellenceNevada
NEWINMassachusetts
Oregon Water Tech InnovatorsOregon
Urban Clean Water Technology Innovation Partnership ZoneWashington
The Water CouncilWisconsin
Water Economy NetworkPennsylvania
Sources: EPA, Xconomy research

The trend makes sense. Next to air, water is our most vital resource, and its sustainability is being threatened around the world by climate change, drought, contamination, and other challenges. New technologies will be needed to address these problems, and the leaders of each of these water groups believe their regions could produce solutions with global impact.

“I think everybody sees themselves as being able to participate in that theme, albeit from different perspectives, solving different challenges,” Murphy says. “I believe that we’re seeing water, in general, move up on the priority list.”

Murphy and other local advocates believe Massachusetts has the ingredients required to deliver solutions to the world’s water problems: considerable brainpower among its entrepreneurs and academic researchers, a large pool of investors, and a proven track record in developing innovative technologies in a variety of sectors. “There are not many areas around the country that have this conglomeration of assets to leverage,” he says.

To help build the infrastructure to support water innovation, Golmer wants to focus on grabbing more attention—and more funding—from local companies and government leaders.

Currently, much of NEWIN’s funding comes from membership fees, but a third of those members are startups, like Desalitech and Oasys. Water tech startups are vital stakeholders, of course, but they’re also ones that don’t normally have a lot of money to throw around.

NEWIN has some corporate members, like Aecom and Xylem, but Golmer would like to see more buy-in from large companies with a vested interest in helping the local water industry thrive. MassCEC has a deal that expires in January to match private investments in NEWIN, with MassCEC providing up to $100,000. So far, NEWIN has secured more than $50,000 from the private sector, Golmer says.

One of the barriers for large companies getting involved, Golmer says, is they tend to be conservative when considering opportunities to partner with or invest in startups. “I think they’re not going to support the startups until they’ve gone commercial and got maybe a couple of million dollars [of revenue] under their belt,” she says. “The industry titans are interested in what’s happening in the universities and in the startup companies, but I think they tend to keep them at arm’s length until they’re sure.” She would know, having worked for GE and Kodak, among other big companies.

After the funding agreement with MassCEC gets phased out, Golmer and Nicole DeSantis, NEWIN’s director of research and engagement, will continue running the nonprofit, but without getting paid. Golmer says she intends to split her time between industry consulting and volunteering for NEWIN, while DeSantis is looking for a full-time job. The organization would go back to having a paid staff if it secures enough funds.

Those fundraising efforts could get a boost if the Internal Revenue Service approves NEWIN’s application to form a separate entity incorporated as a 501c3. Its current 501c6 designation allows it to do more lobbying, but it hurts its eligibility for grants and private foundation money. Having a lobbying arm and a charitable arm with more fundraising flexibility “should make a difference,” Golmer says.

Refining its message will also be important.

“NEWIN is still a young organization, and our objective, strategy, and metrics are still being developed in response to the water community in New England,” Golmer says. “There are so many issues that we could rally around and so many resources here in New England.” To pull together a group of backers, she adds, “we need to now get specific and target an objective companies will fund.”

Although the region has faced some water difficulties, such as Cape Cod nutrient pollution, the problems arguably aren’t as dire or visible as they are in, say, drought-stricken central California. Instead, Golmer believes NEWIN’s pitch must focus on economic development opportunities.

A recent study commissioned by MassCEC found that Massachusetts is home to 93 water tech companies that employ 5,201 people and have a $1.7 billion direct economic impact on the state. Surveys of those companies found they expected to grow their workforces by nearly 8 percent this year, according to the report.

“That indicates that we’ve got a tremendous amount of potential,” Golmer says.

Still, Golmer admits it’s been slow going for NEWIN. “As we look around the country, though, I think cluster organizations took years to get going. So, maybe I’m just impatient, which is nothing new.”

One of the groups NEWIN is trying to emulate is The Water Council, located in Wisconsin. That organization was founded in 2007 as an arm of the Milwaukee 7 economic development group, and then spun out on its own in 2009.

The goal is ambitious: Make the Milwaukee region an internationally recognized hub of … Next Page »

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Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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