Why We Invested in HOPE Hydration
If you’ve ever been stuck holding your water bottle under an absurdly slow stream of water from a dispenser with a small red light looking accusingly at you (which means “Replace Filter”, and no one does), you know water fountains are… not ideal. But for everywhere from airports to schools to public parks to sports venues, the humble drinking water fountain is at the forefront of cities’ environmental sustainability, plastic reduction, and water access goals. Fountains are now mandated around the world, and they have barely been innovated on other than a motion sensor and a bottle counter. Venues hate them because they are a one-way, perpetual cost center. They are required to pay for the fountain, the water that flows through it, the filters, the replacement of the filters, the maintenance of the system - forever. And over time this perpetual loss will be multiplied by the requirement to install more. There is a huge opportunity to make them beautiful, engaging, reliable, trackable, and crucially for them to be a revenue-generating asset. If you can turn the cost center into a profit center, not only do you solve the problem for the real estate owner or operator, you create an incentive structure to supercharge the proliferation of water fountains in public life.
That is precisely what HOPE Hydration is doing. They’ve transformed water fountains from a pure cost sink to a revenue driver for venues of all kinds. It’s a simple idea - a high-class, reliable, connected drinking water fountain, with a large screen attached to run ads. It allows brands to associate inextricably to sustainability, health, and public-spiritedness, while being able to track interactions closely and accurately. And by generating revenue, HOPE enables water fountains to be installed in places where the price to build and manage them would otherwise be near impossible. HOPE is a step-change in the evolution of global free, reliable water access and having known them since 2021, we are delighted to announce them as our second investment in Fund II. Here’s why we did it.
A Refashioned business model to an outdated products
Water.org initially flipped the water access script when they responded to broken wells with a business model. Communities clubbed together to fund the opex of a water access point. HOPE is scaling a version of that idea, applying the same logic to broken water fountains (a fancy well of sorts, if we’re honest). The cash flows don’t come from the community, but from the advertiser, using their willingness and ability to pay as the engine for proliferation of water access. By co-locating a high-quality screen to a reliable, sturdy (and hidden) dispenser, the team at HOPE is creating an ad revenue generator at every single water fountain. That revenue not only covers the cost to install and maintain the unit, it creates a profitable revenue stream for venue owners. Additionally, the units track online and offline times, number of refills, footfall traffic, plastic reduced, water saved, maintenance requirements and timing and more. They’re back-end will allow advertisers to monitor ROI and self-serve ad buys on the platform. It's remarkably well thought-through.
The fastest we’ve seen from $0 to $1m
When you have a product that transforms a cost to a revenue stream across something as ubiquitous as the water fountain, maybe growth wouldn’t be a shock, but the current (and potential) pace is remarkable. Jorge and the team achieved $1m in revenue in their first full year of business in 2023, including deploying with the likes of Nike, Times Square, Liquid IV, Coachella, Cannes Lions, the Formula 1 drivers’ paddock, MSP airport and more with an eye-popping pipeline. They delivered 240,000 refills in August alone. They have secured partnerships with major advertising agencies, Dentsu among them, and achieved 90% sell-through rates. They are on track for an exceptional year.
Exceptional capital efficiency
The team at HOPE have used extraordinarily little capital to get to where they are. With $16-18k in COGS, dropping to $5k with their deepened partnership with a major supplier, HOPE is building a highly capital (and water) efficient machine. They are a superb example of the benefits of NOT raising a ton of capital early, and getting really good at being scrappy - because you have no other choice. The back-end is built and the unit economics are excellent. In Q2, they tripled the number of units installed with no let-up in in pace or quality. They’re squeezing a tremendous amount of juice out of very few oranges to produce some of the most impressive results we’ve seen.
A founding team that knows how to get a Bono Selfie
It may sound weird, but this business needs someone who knows how to get a selfie with Bono. Jorge Richardson (CEO) is relentless, and a deal-maker to his bones. He’s fun, savvy, charismatic, driven and is proving himself to be a strong operator - the type of founder personality/market fit in a company where personality really does matter a lot. The advertising business is very different to the water business. He has closed large contracts, built an even larger pipeline, and overseen the production of two SKUs of a superb product, all while living off fumes. And he has gathered an exceptional team behind him. HOPE co-founder, Cristina Gnecco, brings a strong track record at Global Citizen to lead partnerships, and the engineering and production team have done an excellent job operating in bootstrap mode by iterating on the product quickly to respond to customer feedback. The HOPE team are well-poised for their next-stage of growth, and many, many more selfies.
Global impact from New York to New Delhi
HOPE’s vision and potential for impact are enormous, and 2025 looks like it could be another step-change in their significant growth. To date, they’ve refilled almost a million bottles worth of water, avoided 20k pounds of waste and 10k kg of plastic, and saved over 1.3M gallons of water and counting. If they continue to get things right, they’ll enable mandates for zero plastic at hundreds of public arenas, and will open up significant free water access in low access locations and geographies across the world. We think that this gets really interesting when you realise the model holds not just in Times Square in New York, but in the main railway station in New Delhi. As a B Corp, impact is in their bones, and there is an entire world to serve with clean, reliable drinking water at no cost to the consumer. With a market worth at least $50bn a year across outdoor advertising, water fountains, bottled water and dispensable beverages, there’s plenty of room for them to continue to do good.
We’ve been tracking the HOPE team for some time, since we regretfully passed on their pre-seed round in 2021 (but Tom likes to think we did them a favor for the reasons outlined above…). They’ve since proven their (very) high say-do ratio, they’ve built an exceptional product with clear market demand, and a shot at getting to an installed scale that could support a fascinating business. Jorge, Cristina, Dave, and the entire team at HOPE Hydration, thanks for letting us be a part of it, and welcome to the Burnt Island.
