Innovation & Investment in Water Technologies:A Local & Global Perspective

Assaf Barnea, CEO

“Water Innovation”…

It just looks transparent

and simple….

but, there is no such

thing as: “Just Water..”

World largest Desalination plant Sorek & Ashkelon (RO)

World record in waste water reuse (75% of total consumption,

next Spain 12%).

Leading position in Dripping Irrigation systems.

Unique integrated water management system (4 water sources to one system).

Water management & Water security

Unique National carrier project .

4th largest Filtration plant in the world.

Leader in Technology Innovations

Israel- A Global Position & Leadership in the Water Market

A Historical Hub of Innovations & Technologies

Probably the first Exit in Water…

“The prophets in the Bible never accepted the droughts of the Negev and envisioned that one day “water will flow out of the desert and streams from the Arava valley.”

“It is here in the Negev that scientists and researchers are faced with the challenge of transforming sea water into fresh water”..

Ben Gurion: a new perspective on Water and Science

(Sede Boqer 1955)

Innovative Breakthroughs out of Israel

Netafim - Drip irrigation

Given Imaging – Ingestible video camera

Intel’s Centrino and Pentium 4 microprocessors

M System’s Disk on Key and Disk on Chip flash memory

GE Healthcare’s portable cardiac ultrasound system

The Phillips Brilliance CT Scanner

IP Telephony invented by founders of Vocal Tec

AOL Instant Messenger ICQ

Zip compression technology

STATE OF ISRAEL Ministry of Industry Trade and Labor | Foreign Trade Administration

| Investment Promotion Center 8

WaterThe Israeli Experience

The Notional Water Program

Increasing R&D

Activities

Local MarketInnovation

Strengthening

Human

Capital

Penetrating

World

Market

NEWTech Key Elements of The Program

Southern MID-West

California

Death Valley

ArizonaNevada

Israel - the “Beta Site Bridge” for Water Innovations

24 incubators: almost all of them “Privatized”.

Approximately 200 projects are in development stage at

any given time (Bio, Medical, IT, Telecom, Cleantech).

Budget for project: $500K- $1M.

Government support - OCS: 85% of budget

Support duration: 2 – 3 years

Equity split- range of 30%-70%

Total Annual Government Budget $ 45 M

Success stories: Protalix, Compugen, dpharm,

Enzymotec, Sightline, Remon Medical, Aeronautics,

ProActivity, Nidaria, Hydro Industries.

Israel’s Incubators Program- Office of Chief Scientist

The largest water technology seed investor worldwide with a portfolio

of 12 start ups companies.

As of February 2010, owned and operates under Aqua Agro

Cleantech fund in cooperation with the Israeli Chief Scientist. Till

recently, held by the Canadian Stern Group based in Vancouver.

Strategic Partnership with Israel’s national water company Mekorot.

Advisory Board composed from Israel’s best water experts.

Focusing on screening the most promising ideas from Israel’s top

academy, water institutions and private entrepreneurs.

A solid platform for developing and commercializing water

innovations.

Kinrot Ventures-Israel’s Water Incubator- Profile

AquAgro Cleantech & Water Fund

A VC fund investing in mid-to-late stage technology companies in water,renewable energy, electricity demand control, environmental, “smart”agriculture/food;

First exit done , distribution in April 2010 at final closing .

Experienced team with strong VC and sector track record;

Strategic partners in target markets;

Strong advisory board and venture partners;

First closing completed in December 2007

Investments in eight companies already completed

Following the approval of the OCS-a start up is born in the Incubator

Idea

Patent

Technology

Exit towards

an Exit

Initial screening of the Deal flow by the Incubator

R&D of the incubator company towards Beta testing

Kinrot Ventures -A Seed Investment Mechanism

Initial sales, external rounds of Financing

Beta- Alpha- Feasibility

Prof Rafi Semiat - Head of the Grand Water institution Technion.

Prof Avner Adin - Chair of the Adin water Committee

Shimon Tal - Former Water Commissioner .

Ilan Wilf - CEO Atlantium.

Roy Amizur - CEO CTG

Zur Ben David - Founder BlueI technologies.

Yossi Yaacobi– Director, Mekorot WaTech

Elad Frenkel CEO AqWise

Tamar Morag -Reinhold Cohen

Prof Bear-Dean, School of Engineering, Kinneret College

Kinrot Ventures Advisory Board

Aqua Digital- Innovative Digital flow metering

Aquagen-swimming pool application.

Cooltek- on demand cooling tech

Aquarius -online leakages detection system

Kolmir-new ultrasonic filtration tech.

TA count- near real time micro organism detection.

Hydrospin-in pipe energy production.

Diffusair – innovative aeration technology for waste water

SeaTech -production of magnesium from Brine

SPC- sophisticated Pressure control for households*.

Wadis- electric pulse for water disinfection *

Eltav -wireless

solution for valves in

the process industry

PML- laser detection

of particles

Kinrot’s Water & Cleantech Portfolio

Total population(all microbial cells present in tested preparation)

Dead microbes Quantified by microscopy or

cytometry

Live (viable) microbes

Nonculturable Not differentiated using rapid

microscopic, biochemical, molecular methods

•Spores•Anabiotic forms•Microbial cells in shock •Non reproducible mutants•Drug treated microbes•Others

Reproducible (culturable)(the only ones that matter)

Quantified by

•Plate count methodologies

•TACount

As far as we know, No other technology is able to do a plate equivalent test without culture

Kinrot TA Count-a unique rapid microbiology technology

Confidential and Proprietary

Diffusair 2009

Diffusair- Innovative Aeration technology at 50% of the cost

~1.5% of total US electricity

consumption

Aeration accounts for ~50% energy cost

in WWTP

Translated to >3,000 MW at US$1.6

billion per year

Trends: US growing regulations Rest of

the world 3-4 X US with Growing

capacity and regulation requirements

Electricity distribution in WWTP

7% 1%

52%4%

11%

25%

pumping and primary treatment primary settlingaeration secondary settling and RAStertiary treatment sludge treatment

Per US DOE Data -Energy consumed by Waste Water Treatment

Plants (WWTP)

19

Kinrot’s Eltav-Unique Wireless Solution for the Process Industry

• Hundreds of millions of industrial valves,

mostly Not monitored.

• Eltav brings a breakthrough wireless

technology, that provides real time

information directly into the control

process,

reducing failure and risk while increasing

safety and yield.

All, for a fraction of the cost.

Jun-10 You have nothing to lose but your cables…

Total Assets- $ 3 B

$ 600 M revenue

3000 water installations

80% of the total water consumption

WaTech- Entrepreneurship & Partnership Center

Kinrot’s Strategic Partner - Mekorot Israel’s National Water Company

Overcoming the Conservativeness-Establishing a Global Platform

Partnership Agreement

with LA Water Department

Milwaukee Water council

Central Valley Water

incubator in Fresno CA.

Non official

Relationship with:

GE water

Siemens water

Veolia

PUB Singapore

Cleantech VC and PE

World bank

“A Genius is an African who dreams about Snow” Vladimir Nabokov

Promising Entrepreneurs.

Ideas that can transform into technologies.

Strategic Partners.

Potential Investors (Pre and Post incubation).

Beta Site with potential customers.

Innovation is a constant Search !

The “Innovation Trap” or “The Tipping Point” for Cleantech & Water Technological Innovations

Define the level of innovation needed (best of breed?)

R&D… r..R d..D..

Death Valley..

Scalability..

Conservativeness (Reregulation & Buying cycles).

HR clash.. (Innovation champions)

Think Global Act Local ! (True needs & Bottom up approach)

Innovative/adaptive Business models !!

Know the historical value chain..(who is the customer,

service provider, NGO)

Scalability & Techno/Economical Feasibility..

New water

desalination

approach from MIT

and South Korea

could lead to

efficient small,

portable unitsPhoto Patrick Gillooly

Photo: Patrick Gillooly

Innovation meets Infrastructure (Clayton Christensen, Harvard Business Review)

Global Water MarketsAwareness

ConsiderationPreference Execution Loyalty

Creating a “financial comfort zone” for the “innovations meets infrastructure convergence”..

The Challenge of the industry

The Buying Cycle.. & the VC’s current position for water investments…

2004 2006-2010

GlobalWater Market

States

A Strategic move to various Corporate, Funds & States..

Tips… Drops.. Currents..of Investments

BPT (Israel)- raised $12 M from Pitango & US Venture Partners for commercializing advanced

membranes-based separation solutions for water and waste water industries.

Ostara Nutrient Recovery tech (Vancouver) recover resources from Wastewater, raised $10.5

M from Vantagepoint & Foursome (Sep 2008)

BioPetro Clean (Israel), biological WW Treatment) raised $5M from 21Ventures. (Sep 2008)

HaloSource (Seattle)water& antimicrobial tech raised $11.5M from Origo & Unilliver (July

2008)

Canada’s XPV -EnviroTower Inc- cooling tower water treatment tech, Pionetics water

purification systems for residential use

NanoH2O (CA), Nano RO membranes raised $15 M from Aok & Khosla Ventures.

Energy Recovery -- 2007 IPO

A Significant and Growing Market

29Global water intelligence ,GE ,Source: SAM

6-7% 10-12%

Med growth rate segments

(utility, basic infrastructure)

High growthrates segments

(desalination, membrane, security)

:2008-2004growth rates Estimated

7-8%$600-800B

$500-600B

$400-450B

$300B

ElectricPower (E)

Semiconductor

$400B

Cellular WaterIT

$600-650B

Global markets’ sizes comparison:

TelecomEquipment

Pharma

$200-250B

Biotech

$40B

65%

25%

10%

Infrastructure(Construction & management)

• Basic equipment (pumps, pipes)• Construction

• Basic agriculture equipment • Municipal water utility

management

B230-260$B80-100$

B500 $ Water

Technology• Water Treatment

(municipal, industrial)• Desalination and

waste water treatment• Water monitoring and

equipment control• Water security

(2009)

The Global Water Technology Market

Source: Seckler et al, 2002*varies according to definition

Water Shortage Areas

People living under water stress*

1B2004

3B2025

Water Demand Growth Exceeds Population Growth

Depleting Resource – Future Global Water Shortage

…”Show me the Money…”

The Market & Needs

PeopleTechnology & IP

The ROI -Evaluating the Start Up DNA

“Come on in, the Water is fine…”

Thank you

Assaf Barnea, CEO

abarnea@kinrot.com