Why we invested in Spout

At BIV we have something called the Thirty Years Test. With select companies that seem futuristic, we ask if it’s a no-brainer that their tech will be a thing in thirty years. If the answer is yes, we know it just makes sense. We then have to layer the “Why now?” question, because being early is the same as being wrong.

Atmospheric Water Generation (AWG) is picking up steam. The idea of removing moisture from the air in order to create drinking or irrigation water is not new, but there is a considerable amount of entrepreneurial energy going into it – from SOURCE to Watergen to Uravu to Desolenator. And that’s a good thing. Off-grid, reliable, economic water sources for beneficial use (from consumption to industrial processes) reduces the pressure on finite freshwater. But one thing has concerned us - most of the solutions are big, and expensive. That could be fine if the individual unit economics make sense, but if they all make about the same amount of sense, then what you have is something where the solution is great, but it’s tough to make money sustainably given inevitable (and we think current) commoditization.

We have been on the lookout for an AWG company for a long time. And we’re excited to announce we finally found one that passed both the Thirty Years Test, and whose timing could very well be bang on. Here’s why we invested in Spout. 

Bottled Water is Heavy, Expensive, Unsustainable, and Stupid

A countertop AWG unit makes a ton of sense. The water delivery and bulk bottling market is $13.3bn per year in the US alone. Many families are spending $80 per month on bottled water. Some higher end consumers are spending in excess of $300 per month on Alkaline water. There is a lot of market to aim at in domestic consumption, for which a shipping container with a giant dehumidifier in it isn’t relevant. But… 

Founders Achieving a Lot with Very Little

When we met Reuben and Tyler at Spout, it was clear something different was going on. To build a consumer product, you need entrepreneurs with experience in B2C, which unfortunately is relatively rare in water. The combination of Reuben’s technical experience, and Tyler’s understanding of the consumer space is a match that’s hard to find. And the results have been electric. Spout has achieved what some companies have spent in excess of $10m failing to do. They have created a 1-1.5 gallon per day capacity countertop AWG unit at a current price point ($600) that makes an awful lot of sense for people who buy bottled water or use water delivery. With scale, that price point can fall an awful lot, allowing off-grid access to the tens of millions of people who do not currently have it. 

Non-Trivial Engineering

The alignment of taste, size, noise, power draw, monitoring - it’s massively challenging, and they have completed their first Beta production run of 10 units, from idea to completion, on a little over $250k. That’s wild. They have a credible plan to get their price point down to $200 at scale, while preserving margins. And they made the world's smallest atmospheric water generator (to boot). But the killer is that the water tastes great. At the Blue Bottle Coffee on Market Street in San Francisco, Reuben gave me my first taste of Spout water (The Best Water Not on Earth - trademark pending) and they have nailed such a delicate mineral dosing balance. 

Exceptional Process, and Battlefield Experience

Reuben and Tyler spent hundreds of hours conducting interviews, combing through customer feedback, Amazon reviews, anything they could find to really understand what mattered to customers of consumer water. The taste of the water is non-negotiable, the unit can’t be too big, too loud, too expensive, use too much power - the practical elements that previous tilts at the windmill ignore. They understand the product requirements intimately, and when you combine that with Reuben’s 5+ years’ experience with the technology, something magic has happened.

Do the Work to Tell the Story

Working with them on the construction of the deck for their seed round (open now, get in touch) was confirmation of what we saw in December - an innate desire not to tell some shiny part-true story for investors, but the right story for what makes sense in terms of the reality of the technology and the market. They want to choose the funding partners that make sense, and that agree with their understanding of reality. They have immense humility for people who are so accomplished, and that will serve them very well indeed. 

There is an enormous prize here, and while countertop units of many stripes have met sticky ends, these are two people doing things the right way, with a special blend of technical and entrepreneurial talent. It’ll be deeply exciting to see what happens when they put a team around themselves. Reuben, Tyler - thanks so much for letting us be part of it, and welcome to the Burnt Island.

You can pre-order your Spout unit now! Just head to their website.