Why We Invested in Aqua Membranes

As a water specialist investor, we see a LOT of membrane companies. And that’s not surprising because membranes are fundamental tools for purification and separations, and advances in materials science, surface chemistry, transport theory, and fluid dynamics open the door for new and better ways of doing things. Membranes separate components in a fluid stream that’s typically aqueous but can be a solvent or gaseous. There are many types, with major classes including reverse osmosis (RO), nanofiltration (NF), ultrafiltration (UF), and ion exchange membranes for electrically-driven separations - the full list is long. Membranes are used for a wide range of commercially important separations, including seawater & brackish water desalination, ultrapure water production for semiconductor and pharmaceutical applications, for producing food & beverage ingredients, and uses in textile dye production, mining, and even now being deployed for producing critical metals as well as biogas clean-up and carbon capture. 

The leading format for deploying separation membranes is the spiral wound membrane element which we estimate the global market to be around $4.5 B/yr and growing steadily at around 10%/yr, and the lion's share of this goes to RO. But, RO membrane elements haven’t seen a step change improvement since the invention of the multi-leaf element by Don Bray in 1965, which is the design used in essentially all spiral elements today, and the invention of the thin film composite polyamide RO membrane by John Cadotte in 1979, which is the technology used by every major producer of RO membranes. There’s been a ton of continuous improvement that have brought steady incremental gains in RO membrane performance, quality, product variants, and cost over the years but these have been within the guardrails of these foundational inventions.1,2

The state-of-the-art spiral wound membrane elements of today are constructed from components that are little different from what Don Bray used nearly 60 years ago - they use similar permeate tubes, permeate carriers, glues, and mesh spacers. Today’s RO membrane elements are high quality products produced using precision auto-winding production equipment, but the construction and base components are pretty much the same as they have been for decades. And, spiral wound membranes are problematic in the minds of many end-users because they tend to foul, clog, and consume a way larger than necessary pressure drop that is a parasitic energy loss and operating cost - and cleaning these elements when they foul takes them off-line, uses chemicals, and each cleaning slightly damages the membranes to the point that they need to be replaced after a few years. Many industries would like to run the membrane elements to higher recovery rates, but the fouling and clogging nature of these elements is a hindrance.

One component of spiral wound membranes is so rudimentary that it’s almost embarrassing: the mesh spacer. It has the super important functions of providing uniform flow channels and creating flow patterns to break-up the concentration polarization layer and prevent fouling and scaling but is grossly simple and non-ideal. The mesh spacer looks like a window screen made of plastic, with two intersecting strands - it’s not highly engineered, not purpose designed, but cheap, available, and proven. While it’s obvious that the mesh spacer is non-ideal, its use still persists. It does OK with breaking up the concentration polarization layer while the intersecting plastic strands create low shear zones that are magnets for trapping solids and clogging, which reduces membrane performance to the point where the elements need to be cleaned frequently and makes running at high recoveries challenging. And the poor fluid dynamics means that each membrane element consumes about 4-5 psi of pressure drop in just the feed flow channel of a standard 40” element, wasting energy and actually making the design of many systems suboptimal.

Enter Aqua Membranes, who offer a completely new paradigm for achieving the necessary functions of the spacing element but in a nearly ideal way. We (and others) think what they have is the first step-change in RO membrane design in decades. The company replaces the mesh screen with a series of small features printed directly on the membrane in an engineered pattern. The height of the printed features define the flow channel dimensions and their printed pattern impart flow profiles that more efficiently break-up of the concentration polarization layer with 50% to 80% less pressure drop. Due to the absence of strands, fouling and clogging is hugely reduced as well, and this technology enables systems to run at higher recovery rates. Another huge benefit is that these printed spacing features don’t require much height, so the flow channel thickness can be what it needs to be vs what it has to be to accommodate intersecting mesh strands, meaning that more membrane area can be packed into the same standard module design. And the amount of plastic used in these little printed features is significantly less than the amount of plastic used in today’s mesh spacers. 

With the increased membrane area and with the minimal pressure drop in the feed channel, membrane systems can be redesigned to be fundamentally better, more productive, and lower cost. The technology is a straight-forward drop-in to existing membrane systems, achieving a range of benefits including more water production (because of the increased membrane area), lower energy consumption (by choosing to produce the same amount of water but at lower pressure), achieving higher water recoveries, and more consistent performance with fewer cleaning cycles and less chemical use (likely resulting in extended membrane life).

The Aqua Membranes innovation is a clever, well-patented innovation that is quickly gaining market adoption and is winning industry awards. We frankly don’t see why their tech won’t become an industry standard. We love this company. Here’s more on why we are thrilled to have led their Series B as the first investment from our Opportunity Fund I.

First step-change improvement in reverse osmosis in decades

Aqua Membranes has taken a novel and practical approach to attacking the largest inefficiency in spiral wound membrane design. They’ve completely redesigned the feed channel, replacing the conventional mesh spacer that suffers from large inefficiencies and leads to suboptimal membrane system design with their novel, simple technology. In addition to being lower clogging and fouling, the Aqua Membranes technology enables spiral wound membrane elements to be made with significantly thinner feed channels for use in the same systems that currently use thicker mesh spacers, resulting in membrane modules with about 25% to 40% more membrane area. As a result, the additional membrane area allows systems to operate at a proportionally reduced pressure to achieve the same flow rate, saving energy cost, reduced chemical usage and minimized fouling. It really is a broadly applicable step change improvement.

Low barriers to adoption

Aqua Membranes’ printed spacer technology can be applied to a range of flat sheet membranes, including to the industry-standard, Cadotte thin film composite polyamide RO membranes. Aqua Membranes’ membrane elements utilize the same flat sheet membranes, having the same performance characteristics, that customers depend on. Also, the technology  can be applied to flat sheet membranes for industrial process separations or for gas separations or carbon capture. And, Aqua Membranes makes membrane elements according to industry standards so they can fit and be used in existing membrane systems. This is different from a lot of membrane start-ups over the years that have come out with totally new material types that have different separation characteristics, different responses to pH, different chemical compatibilities. Aqua Membrane products are plug & play. Customers may still choose to pilot test before switching over, but the barriers to the pilot test are low and the pilot trial periods can be more in months vs years. And, with adoption growing, new customers can look to successful installations as validation.

Strong novelty & intellectual property position with no known direct competitors

In essence, Aqua Membranes solves a big RO membrane headache by printing little features directly on the membrane surface and rolling them into elements, replacing the outdated mesh membranes with a product that works way better. Their level of detail and attention to design is something more akin to how Steve Jobs differentiated the Mac from every other computer because of attention to detail in the fonts. Aqua Membrane’s printed spacers patterns are visually gorgeous and minimalistic. They have developed deep know-how to optimize spacer print designs for applications based on salinity, temperature, flux, etc., using algorithms informed from fundamentals like computational fluid dynamics as well as test and field learnings. They hold a robust patent suite and envision having a multitude of approved design patterns and even doing custom designs to maximize performance benefits for larger installations.

Outstanding team that exudes “founder-market fit”

We’ve known this team for quite some time - Steve Kloos worked directly with Craig Beckman (CEO) and CJ Kurth (CTO) at Osmonics and GE Water and he’s followed Aqua Membranes since shortly after its founding by the prolific inventor Rodney Herrington in 2011, so we knew what they were working on, and we knew this was an exceptionally well-paired team for the task at hand. Craig Beckman has deep industry and leadership experience with proven CEO chops, having led global commercial teams at Osmonics & GE Water and successfully brought MIOX to an exit as CEO. Interestingly, Rodney also founded MIOX. CJ Kurth (CTO) is a gifted industrial membrane expert who has invented and commercialized membrane products that cumulatively yield $500m+ per yr of sales now for Osmonics/GE Water/Veolia and NanoH2O/LG Chem, with an incredible ability to grasp and master concepts and to innovate in a practical, commercially-minded way. Syed Shah (COO) has deep operations and factory build & expansion experience globally, including as VP at Culligan and President at Paragon Water Systems. The company is moving from commercialization to early growth and scaling, and execution is key. This is a well-designed team to invent, refine, launch, and scale the next step change in membranes.

Potential to become the standard for spiral wound membranes ($4.5B/yr, ~10% CAGR)

Aqua Membranes has a unique technology that, from our viewpoint, is peerless. Academics and various R&D teams, including CJ and Steve at GE Water, have recognized the drawbacks and problems with mesh spacers and the inherent opportunity of a more ideal system and have tried to come up with something better, but no other concept has shown broad applicability, though several novel approaches that are generally quite a bit more complex and/or expensive are used in niche markets.

The initial questions we had on Rodney’s invention was whether the printed spacers would damage the very thin (~50 nanometer) RO membrane film, as any damage would be fatal to this concept, and whether the printed spacers would stay in place and survive years of operation and cleaning cycles. Over the past 13 years, the team has refined the technology so that it not only addresses these points, with years of operating data, but also can be produced in a low-cost, high-throughput, scalable way.

This simple, highly effective, and manufacturable innovation has a reasonable shot at becoming widely adopted. It’s just frankly hard to see why, over time, mesh spacers would continue to be the technology of choice. The company is seeing strong customer pull across a range of segments, predictably getting faster adoption in applications that are experiencing the largest problems that result from the mesh spacer design. 

We’re thrilled to have led this Series B growth investment round in Aqua Membranes, alongside Helios Climate Ventures and the top quality existing and other new investors. Craig, CJ, Syed and the entire Aqua Membranes team & board: thanks for letting us join the ride!

Notes:

1) ZwitterCo’s ultra-low fouling zwitterionic membrane technology is being introduced into RO membrane products and has the potential to be a significant, widely deployed advancement.

2) The most recent step change in RO system design was the introduction of the energy recovery device in 2003 by ERI for seawater RO systems, and every commercial scale SWRO system built today uses an energy recovery device, with ERI being the market leader.