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The Chicago-based water investment outfit hopes to seal the first deal for its new growth-stage technology fund in January 2021. Its unique outlook on the sector sets it apart from its peers.
Source - Global Water Intelligence - WATER TECH INVESTMENT
22 October 2020 - Vol 21, Issue 10)
Chicago-based Mazarine Ventures is aiming to reach first close later this year on a new $50 million fund dedicated to growth-stage investments in technologies which broadly address water risk. The fund, Mazarine Technology Investments, represents the group’s third water platform, and complements a seed-stage fund which has made eleven investments since January 2019, and an in-house incubator, Mazarine Labs. “Part of what makes us unique is our deal flow,” partner John Robinson told GWI this month. “We looked at 500 deals last year, and this year we’re on track to look at more than that. The reason we’re able to see so much is because our purview is wider than just utilities. We have mousetraps set up in agriculture, we’re looking for deals in PFAS testing and analytics, and we have a thesis around satellite-sourced data, because we think the role of satellites in water quality is going to grow.”
Robinson and Tami Fratis set up Mazarine Ventures with Nalco veterans Anders Hallsby and Pete Nassos after both had spent time at Meidlinger Partners, which has notched up some impressive exits in the past three years, including green water chemicals supplier EOSi (to XPV) and pipeline inspection company Redzone Robotics (to Milestone Partners). “What we found is that there is a significant hole in the market for someone who truly understands water – the technology as well as the market segment – and can come in and apply that and identify future winners,” said Robinson. “It’s about picking visionary founders who see what the rest of us don’t see.”
Perhaps the most refreshing viewpoint to come out of Mazarine is that they don’t see themselves as water investors, even if the solutions they support are all geared towards solving water problems. “We’re technology investors,” Robinson states. “If you look through the lens of water, you’ll never make any money. On the water quality side, you say ‘public health’, and people sit up and reach for their cheque books. On the water quantity side, you say ‘climate change’, and people reach for their cheque books. It’s about technologies that solve water risk, and once you look through that lens, you start to see dollar signs.”
Part of Mazarine’s deal flow will come from its unique in-house accelerator, which Robinson describes as a ‘no-nonsense skunkworks’. “We started to see some really early-stage stuff that was too early for money, so we created Mazarine Labs,” he explained. “We decided we needed our own accelerator because companies coming out of some of the other accelerators had inflated valuations, and we want to get to companies before they’re on stage. Some of the most interesting stuff on our desk right now is in our labs, and we feel really comfortable in that space.”
Among the approaches that differentiate Mazarine from a lot of other water tech investors are its willingness to look outside the world of water for inspiration (see box opposite), and its skill in recognising the market potential of innovations that optimise current technology, rather than develop something from scratch.
“Instead of reinventing the wheel, invest in technology to make the wheel stronger and faster”. That’s our thesis,” Robinson summarises. Examples of its seed fund’s investments include Swirltex, which uses advanced vortex technology to improve ultrafiltration membrane performance, and Aqua Membranes, which has developed 3D-printed spacer technology to improve the performance of reverse osmosis membranes.
Hallsby is optimistic that this line of thinking will continue to inform Mazarine’s future investment strategy. “There are tools already out there that people can look at on the water availability side, but what’s missing is the spatial resolution,” he told GWI. “For example, if you had a way of looking at individual wells and how the underground morphology of those wells works, you can determine how much water you’re going to have for the next two to three months if it rains.” Despite the fact that Mazarine Ventures is still relatively young, there are few who would bet against its somewhat unconventional approach carrying it far. “We’re still early days in all this, and will only be successful when we have an exit,” admits Robinson. “So far, we’ve got the right players in the field, and we feel confident in our early bets.”
Full story on Global Water Intelligence (GWI) here