Local firm invests in water technology

Pionetics developing systems to meet world’s needs, demands

A Peninsula company is one of many in the United States hoping to cash in on an increasing demand for clean, uncontaminated water in the developing world, where populations and middle classes are growing faster than the plumbing can keep pace.

Pionetics of San Carlos has just begun distribution of its consumer water purification system in China. It’s a unit about half the size of a covered cat-litter box, which fits under a sink. Tap-water purifiers are old news both east and west, but this one uses a different technology than the 30-year-old reverse osmosis systems that are standard for home use worldwide. What people may not know about their home purifier is that it wastes about 3 to 4 gallons of water for every one gallon that comes out of the tap, said Pionetics CEO and co-founder Gordon Mitchard. Pionetics’ design, an ion-exchange filter, wastes much less.

“It’s kind of ironic that we have a water quality firm here in the United States,” Mitchard said. “Frankly, people in the U.S. don’t care. They’ve got lots of water. That’s not true in China.”

It’s also not true of India, the other market where Pionetics plans to roll out its product in the near term, Mitchard said. In addition to wasting less water, the company’s purifier also can work with low-pressure plumbing common in the developing world, even meeting the needs of homes whose water pressure is based on water flowing down from a tank on the roof. It also has a dial-a-taste feature, so people can chose to keep some mineral flavor.

“Even very poor people in rural India, if they have a water purification technology that doesn’t taste good, they’d rather drink less-safe water,” Mitchard said.

It will be marketed through a Chinese distributor at China’s growing middle class to be competitive with existing systems, which retail for around $300.

Interest in water and water systems has been growing tremendously over the past decade among investors and companies, with some viewing it as the new oil in terms of global importance, according to Michael Horwitz, a senior research analyst with Pacific Growth Equities in San Francisco, who has visited the Pionetics offices.

“I’ve been paying attention to water for over eight years. The investment community has watched all the big companies like GE, Danaher, ITT and 3M make acquisitions in the water space,” Horwitz said. “The reason is that as the developing countries continue to emerge from poverty levels, water becomes a very important thing. This is another part of what I would call the clean technology sector, where everybody’s trying to figure out how to make money.”

General Electric Co. (GE), for example, made a 2004 purchase of desalination, water reuse and industrial-water services firm Ionics Inc. for $1.1 billion. The company further announced the creation of Africa’s largest desalination plant and a membrane-based water filtration project in 2005.

Pionetics’ own product is based on a membrane designed by materials engineer Eric Nyberg, the company’s co-founder and CTO. He and Mitchard incorporated the company in 1995 and received their broad patent in 1998. Nyberg previously worked at Raychem in Menlo Park. They are just entering their third round of venture capital, having already received two rounds of funding. Their funders include Firelake Strategic Technology Fund of Palo Alto, NGEN of Santa Barbara, RockPort Capital Partners of Boston, Topspin Partners of Long Island, Pangaea Ventures Fund and EPCOR Utilities Inc., both of Canada, and Unilever Technology Ventures of San Francisco.

“We felt that the technology that they were proposing had significant global ramifications,” Firelake Managing Director and co-founder Marty Lagod said. “There’s a lot of innovation in this area that’s starting to percolate. That’s a good thing.”

Firelake is also investing in two other water firms, Hydropoint Datasystems in Petaluma and Sensicore in Ann Arbor, Mich.

Pionetics manufactures its devices in San Carlos, employing 20. It plans to keep the factory as a research and prototype plant even after mass-production begins in Asia, Mitchard said.

The business of water by the numbers

1.1 billion people lacking access to safe drinking water

2.6 billion people who lack access to adequate sanitation

260 river basins shared by multiple countries

$34 billion water products and equipment industry

— World Water Council, Cleantech Venture Forum VI

kwilliamson@examiner.com

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