From Startups to Success: Why Mazarine Ventures Invests in Climate Adaptation Technology

 Welcome to the environmental transformation podcast. I'm your host, Sean Grady. Today's guest is John Robinson, and he's the co founder and principal of Mazarin Ventures. Mazarin is a tech climate tech adventure company. And we're going to talk about venture capital and venture investment and John, welcome to the show.

Hey, Sean. It's great to be here. Thanks for inviting me. Yes, absolutely. So John, give us a little bit about yourself. Talk a little bit about if you could Mazarin ventures, what you guys do and, and what your strategy is. Yeah, I'll keep it short and sweet. There's basically three things that are important to know about Mazarin, number one, our founding team comes from water and wastewater.

We spent my business partners spent their entire career in water and wastewater. I'm a newcomer and only 15 years in the business, but we're water, wastewater technology practitioners. And instead of getting into engineering or sales marketing for a corporate, we decided to focus on backing early stage companies that have innovations.

That address some aspect of water and waste water. So that's number one. We come from water focused on technologies that address it. Number two, we love early stage. We love it so much that we even had the crazy idea to create our own skunk works an incubator called Mazarin Labs which is sort of a luxury as a VC because we can mess around with.

Good ideas, bad ideas, maverick ideas, crazy ideas. We see deals every day as, as any VC would do, but like, ah, you don't be nice if it's someone to do this or that. And as hypothesis oriented investors were like, you know, maybe we could create something or maybe we could cobble together a few things and create it.

So number two is we're. Extremely entrepreneurial, which you have to be to be stage. And the third and final thing, which is maybe a good segue into today's discussion is we've learned over the years as water, wastewater practitioners, that water, unfortunately, doesn't get the attention and the money and the respect that it rightly deserves.

And as much as we'd like that to change, it seems like water just is, is a tough sell for, for money and for main street investors. So we looked at climate. And climate is no shortage of money going after climate deals, climate tech. So the question is, how does water fit within climate on the, on the mitigation decarb side?

Water only contributes to about 10% of greenhouse gas emissions. There's not too much you can do there, but it's necessarily pumping and treating your water should reduce their carbon greenhouse gas emissions. So we, we've ended up building a fund on the climate adaptation side of climate. So the thesis there is that as much as we need to decarbonize and net zero and decarb efforts are great, things are sort of getting, seem like they're getting worse.

And so we're going to need technologies that help industry and society deal with the change climate. Which is less of a carbon problem and more of a water problem. So we're Water VC operating in climate. And that sort of the three things you need to know about us. And I am a fluent speaker of Mandarin Chinese.

Lived in China for seven years. Picked up the language and more than conservation conversation. I do business in Chinese or used to not doing too much there anymore. I started, I pick up a new hobby every year. Three years ago, I picked up snowboarding, learned it and can shred the mountain a little bit.

Now, two years I picked up piano, not very good, but can play some Christmas songs on the piano and maybe a happy birthday or two. And then last year I picked up kite surfing. Which is harnessing the power of the wind to pull you across the water. So there's three things about me. I am married live in London, England, and my wife and I are expecting our first child in October.

Oh, congrats. Fantastic. That's going to be a life changer. That's awesome. That's great. Well, so, so why specify in specifically in water, you know, is water, you know, kind of like the new gold for you guys, what's, what's up with that? I get it. Why people say water is a new gold, but we would argue that water has always been more important for gold than gold.

I mean, it's catchy and it sounds interesting to say, but you go back and throughout history, water is. Cities have always been built next to water. Industry and commerce and agriculture is always just tied to water. It's always been the most important thing and if you talk to people in thermoelectric power, coal, and nuclear...

Water is lifeblood of cooling within power plants, hydroelectric power, manufacturing, apparel, pulp and paper. It's a huge part of industry. And then in my home, water is hygiene, water is health, water is cleanliness. So, just in terms of from a business perspective, water is life, water is everything, water is the most precious resource, water is the future.

Those are all factual, but they don't really work as an investment thesis, as a checkbook looking to invest and around a taxonomy and a deal flow and some exits, you've got to find some better framing to hang your hat on. In the VC community, we call it a thesis. Our thesis is water is a risk. Water is a problem.

Water is a headache. Yes. It's a protagonist. It gives life water as a protagonist, disrupter of the story. So we've chosen a thesis that is sees water more as a problem, which is a gloomier thesis, but it's a functional way of working around something that is hard to get trying to solve problems associated with that thesis.

Right. And which is the climate tech or the tech you're looking at to. Yeah. So our North star, our North star in a couple of words is water risk, which, which includes utilities, drinking water, wastewater utilities. They have inefficiencies, they have risks, they have problems. But if you take a step back and you look at water risk, you find yourself in the built environment property.

You find yourself in aquaculture, agriculture, financial services, real estate, manufacturing, hydropower, like so many other industries. Wake up every day to water headaches and water risk. Yeah. There's a lot of it in the water industry. Right. So as an investor, you've got to find a way to approach that. So instead of saying we're water investors or what are tech investors, it's what a risk technology investors.

Gotcha. Gotcha. Well, I was looking on your website and you guys have three different funds going on right now, or that you're, you've been managing. Can you talk about the differences between the funds? Right now and just kind of give the listeners an idea of what you're doing and those three funds you're working through.

Yeah. Fund one is, is complete. We, we've got 12 portfolio companies in there. I won't go through all of them. But they're 12 of our favorite companies in the world. Our first check was in a company called Aqua membrane Aqua membranes in January, 2019. So we're still kind of. New to this and over the, since 2019 to today, we've, we've, we've invested between 50, 000 and 500, 000 in these 12 companies individually.

Nine of the 12, their IP is essentially data science. You talk to nine of these founders. What is your IP? They would say you're producing data on water flow or water quality, or appliance of analytics to something water related. It's essentially data science tools, right? Companies are process engineering the exits for each of those companies as, as a, as a VC, people always ask us, what markets are you in?

And they're thinking agriculture or industrial, municipal, or residential commercial. We, we live in terms of exit markets. So who's going to take us out from our investment in. Conservation labs or flume or clear or Pawnee. So a big part of our day to day job is figuring out what corporates and strategics have an appetite for companies we've invested in.

All of our 12 fund one companies are doing well. Some are nearing all of them. We invested in them when they were. On their way to a million dollars in sales. And a few of them now it's probably half are on their way to 10 million. Some of them are already there and some are still kind of around a million.

I'm really happy with that portfolio. The thesis there was cause it's closed fund now was bringing efficiencies. To the way that water is managed and used. Okay, that's good. And so if you can bring efficiencies is something you can manage risk, right? But in two, which we just announced in January We decided to put more money into one of our fund one companies Swirltax And then we just put money into one of our fund one companies EQO Because we like what they're doing, and the founders are doing a great job, and we wanted another bite of the apple, so to speak, out of our Fun2.

Fun2's thesis is the same, between 50, 000 and a half a million dollars into a company. And the companies in there are and will be we'll probably build that up to 12, 14 companies Approaching some sort of inefficiency relating to the management abuse of water. And these companies cut across, I mean, Clear is in pool tech.

Aqua Membranes is in bringing efficiencies to RO membranes, which cuts across municipal and industrial. Agcor is a fintech company focused on water and ag and finance. I mean, we cut across so many different verticals, which gives us a diversification, which is important for a fund. Absolutely. And then somewhere in the middle there, we decided we needed an incubator.

So we started measuring labs. We've got. A bunch of stuff going on there. And then we started to hang out with a lot of the climate crowd and they were like, we're not doing water. We're doing climate. So we pulled back the curtain a little bit. It's like climate means carbon for them. And so we realized that there's this mitigation industry of stopping and slowing greenhouse gas emissions, which is great.

We're not against it. That industry is mature. It's crowded. So we sort of challenged our own sort of knowledge of climate. And we thought, what else could you do in climate? And after poking around a bit, we stumbled across this word adaptation. And if you Google search for your audience climate adaptation, you'll find a whole ecosystem of public and private sector entities, businesses, investors who are focused on helping.

Industry and society adapt or be more resilient in the face of changes happening in climate. So we have coined the term climate adaptation tech, CAT and that is checks between 500, 000 and 5 million focused on growth stage companies that have innovations that help their customers adapt to an already changed climate.

So it's not that we're giving up on carbon In fact, we're doing an event in October. Half of the program is on fighting climate change and half is on living with it. Right. Yep. And so our fund three is entirely focused on the live with it, the deal with it side, which is where and how water practitioners can lend a hand in climate on the adaptation side.

But it's a little gloomy, it's a little defeatist, because it's kind of just saying things are going to get worse before they get better, as opposed to the warming atmosphere. And that's an inconvenient narrative. A lot of people still are going to win the war on carbon. So that's sort of how we're structured in terms of our vehicles, the money behind everything in Maserati comes from family offices, individuals that have done well and want to participate in the deal flow.

it was kind of like your limited partners question I was going to throw out there. It's like, you've got these you know, like you said, private offices, individuals who are really interested in supporting your. Your thesis with the investment strategy, right? Our thesis is attractive to probably more attractive to the family office checkbook than the corporate.

We've talked to a lot of corporates over the years and we have a contractual relationship with one corporate, but it's not, it's not an LPGP relationship. But the, the dollars that are going to work through mazarine 100% from family money. Gotcha. We do have a new mandate. That kind of came out of left field a little bit.

A relatively large private equity house came to us and said, we want to put private equity check size money, not VC stuff, but like larger checks into water. And they didn't really have a working. Thesis around it. And so we are now a partner of a large P house, helping them come in and drop significant amount of money into water.

And the thesis that I think we're going to arrive at with them is to come in and accelerate the already existing trend of. As a service, wastewater as a service, water as a service. Storm waters a service, right? Service. The as a service economy, right In water and wastewater, everyone talks about it and there's, you know, people nibbling around the edges of it.

But with this private equity company's large check, we will be able to accelerate more investment into startups. Well, they're not, it's not going to go to startups. It's going to go into mature mid market companies. Okay. But equity money, private equity, wouldn't want to put money into a startups. So it's going into sort of mid market companies and then some tuck ins add some other startups to put around that, that company.

Right. So those are some of the things that are sort of operational that we're doing at Mazarin. That's awesome. That's really encouraging to hear. I mean, that's, that sounds pretty exciting actually for, you know, somebody reaching out and wanting to, you know, invest in, in Mazarin ventures to, to help them.

When you guys are evaluating potential startup candidates, what are you guys looking for? Like, you know, how do you evaluate them? It sounds cliche, Sean, but it's all about the founder and, and, and their understanding who they are as a person. Just briefly in a minute, we use something we call our CIA.

Framework, not Langley, Virginia, CIA, but like character, intellect, access. What is this person's character? It's not that they lie about the numbers in the deck, but like, how do they treat other people? How do they see the world? Are they intellectually curious? Were they raised well? It sounds funny, but like, character has got to be number one.

So we Score quantify. Well, is this founder intelligent book smart or smart, flip it over. You get a better result for the customer or bright, visionary light bulb, see the future. So that I bid the intellect is like, what kind of CEO, assuming the character's good, what are we dealing with upstairs? And they're all important, like an intelligent CEO, a smart CEO, a bright CEO, people might use those interchangeably, but for us.

Book smart hacking, better, and then just like visionary. And then the last bit of how we look at founders is access. CIA access. Does this person know people, places or things that can be helpful? Get your brother-in-law to do your legal work, get your neighbor to do your website, hire your university roommate to do some stuff.

Like, you know, this person, you know, that person like, yes. Build these people around the company and shoestring your way to a business. And we can see that from the outside. If this person has access to, let's just call it non-financial resources. And if they're able to leverage that to build a competitive vision and company, like imagine what they can do if they had a couple of million dollars in their bank account.

So, so yeah, I totally, I totally can resonate with that whole it's a shoestring and, and it's. It's people that are fighters and there are nights and weekends, and they know that while money is fuel in the tank and you need financial capital, there's other kinds of capital that are equally, if not more important human capital, intellectual capital, what's the strategy and most importantly, social capital, the endorsement of somebody who's in name.

So we look at a company, the founder to your question, the founders got good character. And they're smart or intelligent, whatever, and wait a second, they've got that person on their board? Where's my checkbook? Because that person, their name on the board, assuming they know they're on the board, sometimes people throw names of old professors, and if they know their names on the board, that person's name and their endorsement is worth more than five hundred thousand dollars.

So we like to see founders that are able to raise that kind of capital. And then the money is easy. If you can get an endorsement of someone who's a name, the right strategy up the mountain, the intellectual capital, and then you've got a core team of human capital. The money just will raise itself at that point.

I know it sounds overly simplistic, but no, but that's a great, that's a great analysis and assessment of how you guys, you know, evaluate startup companies. I mean, that's one other thing we look for when we look at early stage companies and founders don't always have this in their deck. So if there's any out there listening, we like this slide.

This is what our industry looks like in 2027 slide. So it's 2023 now, if you're in today's market, you're already losing because your startup and like, you're not going to be selling that much this year, next year at onesie Tuesday. So where, where are the tailwinds? Where are the inflections that are happening now in the market, whether it's MNA or the news or whatever's happening, a breakthrough in chat, GPT or language learning models.

What is happening today that is going to enable you to have the asymmetric advantage in 2027? Travel in 2027 as a time traveler, come back and tell me that you see a future that is compelling. That alone is investment grade. An investment grade founder, if they're able to do that in the sector, the founders we don't invest in can't look beyond the product.

We've got this thing. The darn thing works. We have no competition. Everyone's going to buy this. Tell me about the world in 2027. What do you mean? This thing's amazing. You should invest in this thing. So we like founders that are able to think in terms of long term positioning. That's good. What we look like so far, we've invested only in North America, but as mentioned, I live in the UK and we're looking to put some money to work in Scandinavia, Europe, Israel England, UK.

So part of my role over here is to find some opportunities for us to get into. That's great. I love that assessment. Thank you for that. You know, what are the few of the hot startups you guys have invested in so far that you really like and that you see? I mean, you know, there's a few of them.

Obviously, I saw on the fund that you have fun to wasn't real clear on who you all are investing in and there's only one in there. Okay. But you know, all of our companies are, are darlings. Okay. And maybe that's not the right question for you because I know you can't really spotlight one without the others.

There's companies we're looking at for Fund 3 that I can share with your audience. So Fund 3 to remind the audience is our climate adaptation tech. We're looking for early stage companies that are over a million or we can make exceptions but are on their way to 10 million. And they're hoping their customers adapt to our new climate reality.

Upstream. We like what Marshall's doing up there in Boston. They are bringing efficiencies to the, he'll probably get upset with me because I'm probably getting this wrong, but utilizing satellite imagery to inform hydropower and aquatic ecosystem asset managers, lakes, rivers, wetlands, managers, improve the visibility into what's going on with their water in relation to their asset.

We like that one. Earthmover out of New York. They are an early stage company that is. Re imagining the, the data stack of how we manage climate data. So spreadsheets is kind of 1998, 1988. There's gotta be a better way to manage data related to climate. Desalinator out of the Netherlands, they are re-imagining solar power desal.

So it's enabling communities that are in water scarce reasons, regions to generate water for the community without using fossil fuels, kind of interesting. Company in North Carolina called Natrix, N A T R X. Their innovations will help coastal communities manage storm swells and sea level rise, to a degree, by 3D printed barriers that you put off the coast to manage the flow of water coming in.

Those barriers they're printing, massive 3D printers. Also become a home for marine life. And then they're in order to do in order to realize this, they're using satellite imagery and a lot of remote sensing to figure out where and how coastal communities will experience a changing climate. So natrix is kind of an interesting one that we've got our eye on.

There's a Norwegian company called seven analytics. The number seven analytics that we have our eye on, they're making it much easier to understand or affordable and easy to understand flood warnings, floods, floods coming in the next 72 hours, 24 hours. What's the kind of text behind that? It's big data.

So they're ingesting data into their, I think they call them cubes, sort of their modules. So pulling in disparate data sources on X, Y, and Z asset. And it, the data in their algorithms. Will are conditioned or trained in order to understand patterns and probability of something happening. But that, I mean, people have been doing that a long time.

It's modeling essentially, but it's been expensive. So the elites can afford to understand flood risk or big banks or big cities, but like most of humanity can't really afford flood risk monitoring. So they've sort of. They're well at weather intelligence, essentially, I wouldn't call them water tech.

They're weather intelligence, but they're entirely focused on water. So that's like, it's water risk. Right. So those are a number of companies that we have our eye on. Our fund one

I'll pick, I'll pick on the, the little guy clear CLYR clear Jeff Jensen down in Houston. He's re imagining the pool business. I mean, we didn't see this coming. And of course, people in your audience are like, what the hell do pools have to do with water? It's not the water industry. They don't know AWWA.

They don't know ACE. They don't know WEFTEC, but the industry of pools is massive. It's expensive. It's inefficient. Jeff was like, there's gotta be a better way to like, give me an app, make it easy. And the pool elites and the incumbents were like, well, can't do too much innovation and Jeff came along and he's like, we're going to break the rules of this industry, not only for hotels and private family homes, but public swimming pools and high school swimming pools that also encounter a lot of microbial risk, the water for the community.

So this is the kind of company that is, is more in prop tech. And smart home. Then they are the water industry. Another small one. Another small one. And then I'll get to the other questions. Your audience can reach out to me if they want to go through the company's company in Austin. Ironically, both these companies are in Texas eq.

Oh, they are biotech company started by a former oncologist or oncologist researcher, microbiologist john Higley. He was working in cancer. And what's the key to managing cancer early detection? So a big part of that is leveraging RNA technology to understand the dynamics of the cancer in the body. And I don't, I know I have it, but like what's it doing.

So right around that time, there was a boiler water alert in Austin. And he started looking at a lot of water problems, surface water problems. He said, that Lake kind of has cancer. Things are, things are eating it. They, the quagga muscles and the invasive species are cancerous. It invasive in that Lake.

What about using RNA to understand how an aquatic ecosystem. Is becoming impaired with living things, not run off of nitrate and lead or whatever, but how living things are killing this lake, they're the leader in leveraging E. R. N. A. to understand the health of an aquatic ecosystem or lab, essentially, but they have a very sophisticated grab sample solution that enables owners and operators of surface water assets to understand where and how their asset might be located.

Trending the wrong way. So there's a couple of companies that are a fun one that we like. And we like the prospects going forward and then the rest of them are all doing well additionally. So when you, when you guys are you know, looking at the various startups and, you know, what types of investing challenges do you encounter when, you know, you're.

Looking to, you know, identify, you know, a, a candidate. I mean, what, what type of, are there any challenges with the, with actually investing in this market for you guys? The biggest one is founder risk. Okay. Something happens to the founder mentally, physically. Emotionally, they can't, can't operate the company anymore.

And they are that time travel I talked about a few minutes ago. Yeah. So they brought the, they brought the solution to where it is today, but they really just, that's as far as they can take it or that's not the biggest problem, that's the second problem. That's a solvable problem that found a risk in terms of they get sick, pass away, or they have some sort of health problem that prevents them from running the company.

And then it's like, well, let's get somebody else. If they're not there running the ship, like it's a big, big, big, big number one problem. The number two problem is what you refer to. Is that the person that started the company that got it to a million dollars in sales is not the person to take it to 10 million in sales.

That's not the number one problem. I would say that's number two or three. It's a solvable problem. As long as the founder has the maturity to know like, Hey, I'm not the one to do this. So an example that is our investment in flume, FLU M E in San Luis Obispo, California, re imagining smart metering, Eric brought the company to two, 3 million in sales.

And then he stepped aside to be the CTO or maybe CSO. I can't remember. And then he brought in his old buddy to be the CEO maturity. That is a good sign. So that's a solvable problem. Most of the time, other concerns we have are around

I mean, there's always the competition problem that there's other sneaky competitors coming into the space exit markets is a big risk for us that keeps me up at night. We thought we were going to sell this company in three to five years to X corporate. Now that corporate has totally changed the strategy without telling us, without asking us.

Well, that's gotta be frustrating. Now it's like, now we got to re imagine where and how we get our money back from this thing. Well, you know, talk, let's, let's dive into that. Let's double click on that a bit. You talked to, you mentioned it earlier, you know, part of your strategy is the exit strategy. You got the investment strategy and then the exit strategy to get your money back out of the fond to, to have success with, you know, and, and set the firm up for success as you.

You know, I've invested in them. What does that look like? How, you know, what's that engagement with, you know, investors look like for you guys and, and that process, it sounds cliche, Sean, but you actually make your money when you get into something, not when you get out of it and physically you get the money back and you get your bait back and you get some gains, but when you're, you're, you're, you're making a educated bet that this is a great investment and then you, you know, you do that investment and you, when you sell rewards, right, we're getting in at this price, this is right.

This company says they're worth 5 million. There's our, our shares are coming to that and our, the trade is that we're going to get out of this when it's 50 million company valuation, 10 X our money. That's the vision. So the, yeah, the, the investment strategies to find the founder and understand that who understands the market and all that stuff, the exit strategy really is figuring out who has an appetite for this innovation.

In three to five years and we'll pay a premium for it. Usually that's a corporate that is in the business and their management suite is like buy or build. Buy or build. Buy or build. It's like the r d department probably would prefer to get the $25 million to go build something, but like, you know, there's three or 400 deals out there amongst them.

There's a few that are really interesting. That the business units can really use. Why don't we go buy that one? And so we've got to understand those dynamics about what they want to buy and what they need by verse build. So but the problem with that is that the turnover in corporates is like churn in, in, in decision makers.

So conferences and have a. Have a drink with one of the corporates. Like I've got the person who is the buyer of this great. We're having drinks for like six months later, they're moving on to a company. It's like, I can start over the new person. The new person wants to take the direction. So we've kind of learned over the last few years to kind of take a step back and look at a company's overarching mission and needs without counterintuitive.

Cause it's like all business is a people business, but people come and go. And so, especially in corporates, so you've got to sort of look at the. Company from 10, 000 feet, 30, 000 feet, and figure out what they're likely to want to buy in the next few years. I would say that is probably handicapping our own game.

I'd say that's what we're good at. Is how much, even though we haven't exited anything yet, we haven't exited anything yet. Okay. Okay. In all humbleness, we haven't exited yet, but we've got a pretty good idea of who's going to buy. Every single one of those 12 companies in front of one, no guarantees in this life, but like, we're not like crossing our fingers, hoping somebody, the phone rings and people are going by.

I'm like, it could be a Japanese corporate. It could be German. It could be a private equity group. It could be a U S corporate, Canadian corporate. So many ways to slice and dice these companies, but the founders themselves have pretty good pulse. Yeah. They probably have a good idea who would be a great candidate.

And they know we want to, I mean, I didn't mention this at the beginning, Sean, but we are impact investors. I didn't mention at the beginning, the money that we are putting to work in the world is not to make money. It's to generate social and environmental impact relating to water. The only reason we're talking about exits is because this little company doing 10 million in sales with 300 customers, not enough impact.

How could this company's technology create more impact for humanity? Get gobbled up by a corporate and bring that to Botswana and Bangladesh and aging, then you're making more impact. So the only way we can really realize our impact goals is to exit stuff to larger distribution networks, corporates, and that helps us reach our goals.

And the money that comes back, we reinvest it in the next crop. Of early stage founders. And so we want to keep doing this, you know? So you guys have been investing now for what, since 2019, is that right? We got together in 2018 and kind of formed the team. And then our first check was January, 2019. Okay.

So you guys aren't like too far along, less than, you know, less than five years old into your investment strategy with these companies. Still watching them mature. It makes sense that you probably haven't exited yet with some of them, right, because, you know, just the timeline of, you know, in supporting these companies, how much of your day job is dedicated to supporting or looking for the exit strategy versus the, you know, finding the startup and supporting those existing startups.

Each one of us in the team kind of in different periods of time does different things, depending on what we're looking at. Nowadays I would say

let me say about a third of the time is PR. Portfolio companies helping them or Rolodex, getting them in front of the right people and dot connecting them, helping them about a third of the time is helping our own companies connect. We do a lot of events, a lot of webinars, and we feature our portfolio companies in the webinars to allow them to reach new audiences.

About a third of our time is in looking at new deals. And then a third of our time is in Mazarin Labs, our incubator, where we're skunk working some stuff and helping the PE house I referred to earlier and a corporate navigate stuff. Well, let's double click a little on this venture, you know, that your venture lab there, you know, how's that running and, and, you know, how do you select the startups to, you know, participate in the lab?

Talk about the lab processor. So besides the sort of quasi consulting stuff we're doing for that corporate and the p house, the, the core of the lab is, is incubating a business model more than incubating a, a like a chemistry, electrochemistry, material science, microbiology like core science. It's trying to figure out what the right business model is for X innovation.

So about a third of the innovations in labs come from outside people that have an idea. They give up a little equity on the way in, and then we incubate them for however long we think is necessary before we put money in could be a month. It could be six months. It could be a year outside, outside individuals, let's call them human capital and they, they're darn, the darn thing works, but they maybe were out in the market and they couldn't find the wind.

They're like, they're back in the Harbor and they're like, this, whatever is not working. We need to like re reboot this, but a third of the stuff in our labs is that sort of. Someone outside our company has something that's not working. Let's reboot it and let's relaunch it. So we haven't, I

guess, Swirltex spent some time in our incubator. We kind of, I wouldn't say rebooted them, but we kind of loaded up their management team and their board with some of our favorite people in our lab. And on the way in they gave up a little bit of equity for us to be able to, to incubate. So these companies have to offer some shares in the company on the way in.

Before we do anything, but I mean, it's risk for them. It's risk for us. We're getting into a marriage with a partnership where their thing apparently works. And apparently we have the Rolodex and the connections and experience to help the company realize the next goal. So both sides have to take a risk.

The next third of the things in there are stuff, stuff we've come up with on our own, like water click. It's a fun one. We had this idea of, of a platform as a service instead of SAS pass P of re imagining the procurement of digital water for smaller utilities. Small town in America. They want to modernize utility, but like, I don't know, digital twinning and AI and enterprise subscada.

It's all very confusing. It's not that they don't want to do it. It's not even, they don't have money. It's just the way the digital is. So, so we skunkworks water click in our incubator for about a year. And then we reached out to our buddy, Chris Sosnowski at Waterloo. And his company was looking to raise some money and grow.

And we said, Hey, how about if we take our incubated company and Waterly and put it together? And like we, we spent a year and a half in the incubator with Chris, and then we relaunched Waterly, WaterClick, and it's on its way to successful things. That's probably our most high profile example of something that's come out of our incubator so far.

We have three other things in our incubator now that are. Essentially creations of us, like startups that we created from scratch. Gotcha. Yeah. We're trying to puzzle piece the right human capital and natural capital. Once it's ready, we just apply money to it. And they joined fund too. So, so for the, the all the startups in the lab, there is some sort of equity stake already involved with helping them versus, I was kind of curious when, once they exit the lab, do you invest in all of those companies or do you just let some of them go, right?

We invest in all of them. We invest in out of our, now we're at fund too. And then we get more equity. So the way in, we get it once a Tuesday, just to align interest that we're already on your cap table and we haven't done anything yet, but like, we're going to wake up on a Tuesday morning and we're going to help you, right?

And then let's say six months go by. And then it's like, now we know what money is going to be used for check joint fund to. So then we get to, to, to equity positions on the cap table. One is, yeah. Is this the ones that the only stuff we, we, we ice is our own ideas that can't, we can't quite figure out how to get them to market.

We've got, had probably five or six crazy ideas that are like lingering in our lab. Yeah. We just are like, can't quite figure out what, how to make it work. Time's limited. Resource is limited. Like, yeah, you gotta, you know, guys, we've all of this stuff in our lab right now is, is It's data science related.

Well, what about, let's talk, I mean, one of the biggest topics in the water industry right now, especially, well, I'd say globally, but it's definitely in the U S is PFAS. And what are you guys doing in tech around, you know, PFAS contamination, either monitoring you know, removal treatment, what, anything in that space?

Cause I think there's a huge opportunity there. Yeah, we, we got approached, continue to be approached by all the PFAS destruction technology guys using ozone and best oxidation and there's several different ways to destroy long short chase PFAS bonds. We're, we're, we tend to be informed by regulation.

Globally, and we, we just, I know it's contrarian, but like, we just don't see we're kind of, we're bearish on PFAS destruction. They all work. Smart teams, the darn thing works, destroys PFAS, great. But I just don't know that many communities, that many customers that can afford that. And, but it's therefore for the regulatory shoe to drop and force communities to spend.

Money. They don't have billions, billions on, I mean, we already have PFAS in us. Of course, it's not good to have it, but like I've got PFAS meat. So do you, all your audience, everyone's got PFAS right now. So what are, so, and I feel pretty good. So I don't know how they're going to regulate something when it's, it is conclusive, like any doctor would be like, PFAS is not good for you.

Don't want to know you, but like. The science is still pretty early on it. I'm not trying to like advocate for PFAS, but I just don't understand how a regulatory shoe is going to drop on everybody. Like you've got to destroy it. So in the meantime, as investors, we've decided that the most plausible scenario is that in the next five years, the demand for, do I have it?

What kind do I have? How much do I have? Where is it? Solutions will grow like crazy. So if you are in the business of testing and monitoring of PFAS. You're sitting pretty. Well, what about, what about how, I mean, let's talk about the other big driver in the industry right now, ESG and how, how are you addressing ESG concerns in the industry with water tech?

We don't have any concerns about it. Actually. We, we utilize the ESG chassis framework as core to our impact mandate. I know I read the news and I understand like Wall Street doesn't like ESG and Elon Musk is like, ah, ESG is LPS. We actually find environmental, social and government to be three really good realms to manage impact.

It's interesting. So we use it. We have a scoring tool that we use for every company we invest in and we manage their E or S or G impacts as they go forward. And we're diligent in managing our ESG goals as a fund. What's interesting is that a lot of people put us in E cause we're water, but actually most of our companies in fund one score higher on S S and G water quality and contaminated water and problematic water and flooding.

And that's ass. Yeah. I mean, right. It's affecting society. Transparency of information and involving the community is G. Making it easy for people to get their heads around and access water related. And then the E is, you know, protecting the crayfish and protecting the salamander. And like that's important too.

So we, It's all embedded in your thesis, basically. I mean, I just wanted to ask the question to get your take on it because it makes sense to me. There's four, there's, there's four risks that we, I said at the beginning of the podcast, like water risk is our North star. Like that's, that's simplistic. So what are the risks that you industry and society wake up to every day?

Number one, public health and safety, the lead that's in your water, the PFAS that's, that's not necessarily like a, that's a, that's a risk for my family. That's up there with COVID. I mean, water, contaminated water is a public health and safety risk, and it should probably not be managed by the EPA, but more like Health and Human Services, in my opinion.

That's nothing. So if you look at water through the lens of public health and safety, you start to see impact opportunities and you see dollar signs number two, the cost of water risk. This is a risk. The price of water was up. We can't get water. We need like you need to pump it in the cost of getting water fit for use right here where I need it right now.

Is becoming too expensive. That's a risk. That's a problem. So the financial thing. The third one is an environmental risk that too much water too little water compromised water will kill biodiversity and kill ecosystems that everything lives on. So environmental protection risk, the fourth and final one of risk that we wake up to every day is business disruption risk.

If your kid's school has to shut off the water for whatever reason, you're not going to school today. Or your, your facility's flooded. You can't go and manufacture product because you know, you sit in a low spot and so that's, or if the fire suppression system in a commercial office tower is out. No work that day because the fire suppression system had a leak.

There was a fire just leaking on the 20th floor. It's like if the fire suppression systems work, like I don't think it's safe to be in the building. What if there's a fire? The lawyers, like shut the building business disruption risk now for companies that need water, like to run like hydropower or pulp and paper apparently they don't have it.

Like that's business disruptionist. So when you look at water through the lens of public health and safety. Cost environmental protection and business disruption or business continuity risk. And then you layer on climate change. It's a lot of risk.

You start to see opportunities that are way more interesting than yeah. Water's life. Yeah. And just what we're treating wastewater treatment or, you know, drinking water treatment, right? I was challenged on a panel discussion last year. Somebody's like, Oh, so you're saying we just change the framing and everything's all good.

Yes. No, I mean, framing matters. How you package something matters. And you, the lens by which you look at the world through matters, but it's not going to solve flooding just to look at it differently. But really, I mean, and then this sounds equally as cliche is like a lot of these problems in water, essentially data problems.

Again, I know that sounds cliche. I mean, someone's daughter just died in a flood. It's like, you've got a water data problem. You got to like dead daughter problem died in the flood. But like, ultimately, Yeah. If you could collect the data on that valley, and the river, and the precipitation, modeling, move people out of harm's way, floodwaters are coming in the next two hours.

Right. By moving them uphill, and then the comms to get it to their phones. That's just data. Yeah, I know that doesn't sound fair because but some sort of advanced warning notification or monitoring of that could have prevented that that occurrent that event from happening is is basically what you're kind of getting at, which I would agree with that.

But there's a lot of people would argue that we need better policy, which is also true. And we need government to do more. But like. If, if technology could be employed to produce more data on that asset, that bit of the river, and it could be converted and analyze it and create patterns, it's like, and democratize and reach someone's phone, like save lives and livelihoods.

Well, so, so we're talking about, you know, monitoring data or, you know water data and, and, you know, assessing the risk associated. How are you, or what? Do you, how do you see the insurance industry addressing this? Because this has got to be a huge impact to them in their business. And are they looking for technology to shore up, you know, their exposure?

They are. So insurance industry will tell you, anybody in insurance will tell you that the biggest claim globally is not burglary or fire, it's water damage. Number one by mile. And so the insurance industries, it could be water damage in your property, like a flooded dishwasher ruins the floor or whatever, or a leak in the building floor above the blow or the river breaches its banks and the insurance industry and the reinsurance industry are starting to make moves in water generating water quantity data, but not to the degree that I think they should or would or could.

I'm surprised by how thin the efforts are from the insurance industry and water risk. Do they pay lip service to this? Of course. The websites talk about water risk, of course. But it seems like the innovation coming out of the insurance industry, and I'm happy to challenge anybody in your audience who's insurance, it seems like a lot of it is product innovation.

Hey, we created this new product that's going to underwrite this parametric risk. Hey, we got a new product that's going to like reimagine this. You're not investing. They're not really truly investing into, you know, an adequate monitoring network of, of sensitive areas or areas of suspected, you know, water risk to really help them better make more money, make more money, make more money, cover the risk, you know, address the, the concerns of their insurees would explain it to me because I, I don't quite understand why they're not collecting more data on my home.

It's 4. 0 right now. You can collect. Cheap right now my water use in my house and you can take that data and you can understand anomalies and where now there's like problems like this is about to break but have it. I don't know. There's a company called Hippo. Hippo is an insurance company that seems to be at the forefront of this, but like the bigger players.

I don't know. They definitely are in the space, but I haven't seen moves that as many moves or as much action as I would have thought four or five years ago, but we'll see. Well, that's good. Well, Hey, look, I think we're getting to the end here and I thought we might do a quick lightning round on a few questions for us, for the listeners.

You know, what technologies in the market are you bullish on? I

think about this for a second. I like the, and my business partners, I mean, internally, we don't agree on every single opportunity and deal, but I really like the space of re imagining the help desk, large language models, LLM, chat GPT. So I've got a problem. Like I'm a utility operator. I'm an industrial, industrial water person, managing something or even at home, like, I don't know.

Is this normal behavior of water? Am I compliant? We actually got to Google search something, call somebody. I don't want to lose face. I should know the answer to this. I don't want to call my buddy. I really like the genre of improved help desk. Any companies out there that are bringing efficiencies to, Hey, I got a dumb question that I think will be.

Will grow really well in the next decade for industrial municipal and even ag and you're basically ingesting tons of data on like large language models and like all the regs in every state and everywhere in the world. And then I just take my own data and put it up and then I can query it to understand what's what.

I like that. Pretty keen on field pregnancy test sensors. Do I have this? Yes or no. Do I have lead in my water? Yes or no. Pregnancy test. I know it's lightning round. I'm trying to be quick. So lab and chippy kind of stuff. And one more and then we get to the next lightning round question. I'm going to say the space around buoys in lakes.

People have been making buoys a long time. That's kind of like a non sexy. It's a Warren Buffett kind of like, ah, buoy. What can you do? Better, cheaper, faster. If these things cost a fraction of what the old sky, you can put them everywhere. And the comms and then have real time monitoring data as far as the water quality and stuff like that.

And the lakes and rivers. Yeah. I like that. For now we can afford to go one in that part of the lake. How about if you could put six? I mean, I don't want to disrupt all the voting and stuff like that, but how about if the buoys for navigational, those could double as sensors drop in a hundred thousand dollars per buoy is not going to work, but if they're only like a few thousand dollars, so buoy tech, it's an, it's an esoteric little weird corner of water tech.

But I think in the next decade, there's going to be some winners in that space as sea level changes and lakes and rivers become more problematic. The need to know what's going on. Yeah. Yeah. I mean, I could see lakes swimming and Hey, I want to check what's going on with the water today. Yeah. Yeah. That kind of stuff.

Those are three that are kind of interesting right now. Managing a lot of data with those buoys, yeah. Okay, well what tech are you bearish on? Atmospheric water generation. Sounds sexy, sounds exciting. I just don't think pulling water out of air, besides a few niche cases. People invested obviously will disagree with me all day long, but like not, not, not a big on that.

Cloud seeding, shooting iodine pellets up in the clouds and make it rain. Not that interesting. I mentioned PFAS destruction earlier. Not, not, not, not terribly bullish on that one. Anything like pipe replacements, non revenue water, sewer inspection, bearish, bearish, bearish. People know, I mean, I hate to be a hater, like people who put money in the businesses.

I'm sure they're like smart people and well intentioned and the money, like, wish them the best of luck. What about advanced metering infrastructure? AMI. No, we, we already have made our bed in that space with flume flume has like the most elegant solution for how much water this rate payer use today solution flume is that it for us.

I can't imagine too much more that we would ever do. And that got you doing the eye transfer badgers. And those guys like they've got their things they put in and look continue being make money. But like, I think our flume investment is one of the more exciting things. So Okay. You know, and a couple other interesting ones, a matter of time is low orbit satellites.

I mean, there's so many water assets, quote unquote, this lake is a water asset. This pipe is a water asset. This lift station is a water asset. Even the snow stored up in that valley that will melt is sort of water assets. The ability to get every water asset, quote unquote, into the cloud. What's going on with this asset?

It was traditionally really expensive. You had to drive out there and take a look at it. And then go cell phone towers. Yeah. A lot of these things are still not in your cell phone. Tower's not reliable. It's like, well, you can use Laurel land. That hasn't really panned out in the U. S. Europe is much more prevalent.

Elon Musk comes along with Starlink. And there's a bunch of these, there's an Australian company called ESAT. There's an Israeli one called Gorilla. They're reimagining these low orbit birds that are going around the earth. And they're not used for taking pictures. They're used for bouncing signals up and then down to the cloud, up to space, down to the cloud.

If you can get a data point on this asset every day, you don't even need every hour. Maybe even once a week, you can start to see patterns and trends. And you can start to get out ahead of water problems by getting the, the, the assets condition assessment up lower orbit satellites. I mean, Elon Musk's thing, you need a 400 dish and then it's 80 bucks a month or something like that.

They said, Oh, I can make it cheaper if you're only doing one thing a day, but it's kind of expensive, but the ability to get things up into space and down to earth, I think will help humanity get out ahead of a lot of water related problems. So you'd be bullish on that tech work? Bullish. What I'm bullish on is policy reform.

Sorry, people out there who wake up every day, they work in the world of like, the Beltway and policy and like, we need to change water. Of course, policy needs change. I'm just not holding my breath. I mean, It takes a long time. Congress is having a hard time just getting regulations passed. And people, water's so local.

And guess what else is local? Politics. And if you're all the way on the right of the spectrum, Don't even come near me with your federal whatever on the, so I just, I'm not bullish on, or I'm not holding my breath for policy reform. I think technology is where and how industry and society get out ahead of some of these water risks.

All right. Well, let's let's get the, here's, here's another one for you. What deal did you pass on that you regret now?

You're like, man, I wish I would've done that. No, it's funny. Because I missed it. Is there anybody out there? Go ahead and send. Yeah, Transcend is a company that reimagined the way that engineer engineering in the beginning. Now they've evolved to a lot of other stuff, but it was traditionally very expensive and labor intensive and inefficient to, to, to, to develop drawings for a plant, some process because y'all are going to start from scratch and build it from scratch.

But like 80, 20 rule, a lot of this has already been done. Why can't we come up with software that just to use a football expression? Like, I don't want to start on the one yard line. Can you get me down to like the 20 yard line? And then we can start running some offense. So I like that transcend really do.

And then if you expand it beyond water and they're getting into like power grid and all kinds of other interesting stuff, that was one that it's an interesting one. You passed on those. Yeah. Just transcend And then the ones that we've passed on that have not done well, I won't bring those ones up because it's not fair.

Yeah, we're not going to talk about that. That's not fair. No, but there is a graveyard. I mean, we, we haven't done one recently, but we were doing an event with some of our other syndicate partners, some of our other checkbooks that we hang out with called a 10 10 10 round table. And so we did like a.

Invite only webinar where we talked about 10 companies. That are in market early stage companies in market that look to be doing well that we haven't invested in other people stuff Like hey, these guys are doing well. They're doing well 10 companies in market that are not doing well And that's always very controversial because someone's like no, you don't know they are doing well You don't have the information.

We're not on the boards when our investors are to know but from the outside It looks like things aren't going well and then 10 companies that Show a lot of promise that we haven't invested in. That was sort of our companies were in diligence on. So we call it our 10, 10, 10 round table, no PowerPoints, no logo walls, way too incriminating to like throw logos up.

And it gets sent around that like Mazarin doesn't like this deal, but it was informative. We haven't done one in a year or so, but it was a helpful exercise to get Mazarin and some of our. Syndicate partners together to start to like align and find areas of mutual interest. And then find consists, like, you know, what's the common thing across all these things is the founder or read of the market or whatever.

So, well, John, this has been a very interesting conversation. I really appreciate you coming on the show for the listeners and any potential startups that are listening. How do they get in touch with you? If they, if they want to reach out and, and, and, you know, bend your ear about their technology. Find me on LinkedIn John Robinson, Mazarin.

Even if we don't invest in companies, we like to. Help out where possible, make introductions or a bit of, you know, advice or mentorship. Yeah, just find me on LinkedIn and send me a note and more than welcome to spend a little bit of time understanding what the company does. And I mean, we're in the business of investing, like we want to get to yes.

Yeah. Yeah. But it's just so hard. And so many companies, it's like, Oh, I mean, one of the reasons we say no to company, one of the recently, one of the top reasons we're saying no is valuation that this company, like they, they fancy themselves as a 30 million company when it's like, they don't even have sales.

It's like, yeah, that's their vision, but they're not there yet. Yeah. So welcome, welcome introductions or welcome opportunities to make friends with people who are just as passionate about it as I am. And. Thanks, Sean, for the opportunity to be on your, your show. And no, I really appreciate you. We'll get your contact information out, put it on the website and look forward to future conversations.

We really appreciate you coming on the show. Fantastic. Thanks, Sean. Thank you.