Renewal Funds featured in Water Canada Magazine
An Outcomes-based Venture Capital Solution to Water Challenges
By Paul Richardson
On July 12, 2017, Aquatic Informatics announced a three-way merger with Watertrax and Linko technology, forming the largest water data management company in the world. The transaction gave Renewal Funds a timely exit of our position and holding in the company, also delivering a strong return for our investors. It also endowed Canada with a dominant, fast-growing, cleantech leader headquartered in Vancouver, BC.
Renewal Funds invests in environmental technologies and sustainable food systems on behalf of 193 concerned individuals, family offices, and charitable foundations.
The fund supports forward-thinking entrepreneurs, while delivering above- market returns for our investors. Aquatic Informatics was our first foray into the cleantech sector in 2010. renewal was able to play a role in the growth and evolution of the company, which developed from a small start-up to the primary tool of the United states Geological survey.
Impact Investment Needs
Aquatic Informatics is a significant success story in the highly competitive Canadian water technology landscape, where firms are in continual need of capital if the industry is to remain globally competitive. However, the probability of profits from investment in the information technology and energy-related sectors creates strong competition for cleantech companies seeking capital.
The 2017 Canadian federal budget allocated $1.8 billion in funding for venture capital, working capital, and large project finance for cleantech innovation. But, public financing accounts for only a portion of the capital needed for the industry to its reach full potential.
Canada needs a robust venture capital sector, one that moves towards impact investing. A thriving, socially and environmentally conscious financing sector will continue driving Canadian-made, leading technology solutions for challenging global issues. Companies like Renewal Funds play a crucial role in this finance ecosystem. We, and impact funds like us, consider the overall positive social and environmental benefit offered by a product or firm as being equal to the potential profits. Unlike traditional venture capital forms, we offer capital investment with patience on returns to early-stage cleantech firms — we act as a bridge between the two most common models of quick-to-scale venture and public funding.
A thriving impact investment model can boost changing and new Canadian priorities and policies as the world’s technological and economic markets evolve. While fossil fuel companies continue to benefit from huge government subsidies and tax breaks, the cleantech sector remains underfunded. Public incentives ought to be given to broader sectors of companies creating solutions for a carbon constrained future. Renewal will act as a catalyst for these changes.
There is a massive opportunity for financial intermediaries to develop and offer impact models to their clients — the primary vehicle for investors to align their values with their money. But there is also an urgent need for more professionals educated and practicing in the impact space. New product creations that align values with wealth creation present a major new marketplace, as the success of Aquatic Informatics demonstrates.
A robust venture capital sector willing to prioritize environmental and social needs, along with exceptional financial returns, is essential. The rapid shift in economic activity needed to ensure a safe, clean, fair future requires new thinking, and the centrality of water to our social, environmental, and financial needs makes it arguably the most important resource to protect.