Why we invested in ZwitterCo
You don’t often meet someone that you immediately know you’ll remember where and when you met them for a very long time. That happened to me with Alex Rappaport. WEFTEC 2018, Alex visited the Innovation Pavilion talking a mile a minute about something called a Zwitterion and it was clear that this was a very talented founder indeed. He was sure he would get into Imagine H2O the next year, and guess what?
After working with them off and on for two years, it’s a huge pleasure to take the leap with ZwitterCo as Burnt Island’s first major investment. Here’s why we did it.
How a team reacts to the big setbacks matters
In 2019 the team were convinced that water reclamation from massively concentrated fatty water (grease traps etc) was their market. Fast forward to the first contact between the membrane and what turned out to be sludge, and...the team needed to find another market.
It would have been easy to screw the next bit up - wildly grab for the nearest opportunity, or double down, or dilute, or complicate the process, or hire a salesperson. What they did was exactly what you should do, and barely anyone does - they stopped all product development until they knew who they were building for, and why.
They brought in over 150 samples of industrial wastewater of all types, all of it gross, and ran it through their bench-scale system, to see where the initial fit was - where was the performance of the membrane going to stay at 100% as the chemistry dictated it should? Once they were done, they had four initial target markets, and had minimized the likelihood they would waste time and money. That is entrepreneurial process under pressure.
New markets
It’s much easier to win a market that no-one can currently serve. In this case, standard filtration systems literally can’t deal with the streams that ZwitterCo can. They’re opening new markets for filtration, at the right price and volume.
From the ethanol and bioprocessing markets, which have valuable proteins and oils that can be reclaimed, to the agriculture and food and beverage markets, which need high-quality treatment to enable water recycling and ensure compliance, there's a lot of ground to cover.
ZwitterCo is one of those great companies that if they can scale, they fundamentally change the size of the overall market they’re working in, and are the only commercially and operationally viable solution for the marginal market they create.
The right partners
One of the worst questions an investor can ask is “who else is in?” In this case, however, it really mattered that two of the other investors were Mann & Hummel and Digested Organics. Both are important strategic partners, but also have teams right at the top of their respective technical games, who gave us reasonable confidence that while the technical risk was real, we knew what as many pieces as possible were in place. Burnt Island has a deep technical bench, including Steve Gluck who has been digging around Zwitterions since the ‘80s (yes), who conducted a careful appraisal of the team and the technology, and came to the same conclusions as the other investors. The team around this tech is very special indeed, and will give ZwitterCo a real advantage to meet rapidly emerging demand.
A no-brainer ROI and performance combination
In hardware, you need to have a margin of safety around value creation a mile wide for the risk to be worth it. When you see the kind of value creation that ZwitterCo has the potential to deliver (superior filtration performance, reduced replacement and maintenance cost, increased plant/system uptime and throughput, and all this at cost parity/reduction per element AND it’s a like-for-like retrofit) then it’s important to get on the train.
It’s been a huge pleasure to watch Alex, Chris, Chris and the team grow from where they were in 2018 to this week’s announcement that puts their future in their own hands. Our thanks to many of their stakeholders for working with us through the process, and we’re so glad they’re allowing us to take this journey with them. Onward...
