Water purification attracts investors

October 17, 2007 - Exclusive By David Ehrlich, cleantech.com

Altela and Stonybrook Purification get funding for their very different water systems.

Two very different water technology companies announced funding today, adding to a growing list of water deals this year.

Stony Brook, N.Y.'s Stonybrook Purification is developing a process to improve the performance of high flux membranes for use in water purification systems, while New Mexico-based Altela has a unique thermal distillation system for cleaning water that uses no membranes.

Stonybrook Purification, spun out of Stony Brook University, raised $4.1 million in Series A financing led by Boston's Battery Ventures.

Altela, using technology developed at Arizona State University, received $7.1 million in Series A led by CCS Income Trust, an environmental services company based in Calgary, Alberta.

"They may be both a customer and an investor," Ned Godshall, CEO of Altela, told Cleantech.com. "They're in the business, and they've targeted water as being the next big thing."

The company took in $5.2 million from CCS, with $1.9 million coming from existing investors, including the Verge Fund.

Altela is already up and running with a commercial product. Its transportable AltelaRain purification system is built to fit into two standard 20 foot or 40 foot shipping containers.

Take a look at the containers here >> [link removed]

Instead of having to truck the dirty water to a processing facility, Altela can treat it on site.

Founded in February 2005, the company installed its first revenue-generating system in September 2006 at a well head in the Permian Basin in southeastern New Mexico.

According to Godshall, Altela's system has a big leg up over membrane systems, which he said can only handle salt concentrations up to the level of seawater.

"Many waters in the world are two, three, five times saltier than seawater, and reverse osmosis can't treat those waters," said Godshall.

Altela, which uses evaporation and condensation, is not based on using pressure to push the water through membranes.

"For the high pressure pumps you need a lot of electricity. We hardly use any electricity at all," he said.

Today's investment will allow the company to expand its 23,000 square foot Albuquerque plant, as well as move outside of its initial oil and gas market into other areas that need water services, including the semiconductor, food and beverage industries.

Stonybrook Purification, which secured $500,000 of the Series A last month, is still in the development stage. But it's based on years of research by co-founders Ben Chu and Ben Hsiao. Chu is a distinguished professor of chemistry at Stony Brook University, and Hsiao is the chairman of the department.

"We've been studying this market," said David Dreesen, partner at Battery Ventures. Battery is already an investor in Nova Analytics, a water instrumentation company, and Dreesen said the group is actively looking for other opportunities in water.

Stonybrook said its membranes can be used to filter water several times faster than the speed of current membrane technology.

"If you can have a smaller system with less membrane and get increased output, then that drives down the cost of filtration. It also can drive down the cost of energy used to push the water through the membrane," said Dreesen.

The details of the technology are still under wraps.

Other water companies making deals this year include the Netherland's fluXXion, a producer of micro filtration technology, which announced an $8.6 million round in May led by Emerald Technology Ventures (see Now official: big biofuel IPO).

Last month, Midway, Utah-based 212 Resources, a water treatment company named after the temperature at which steam is made, received a $250 million credit facility from GE Energy Financial Services (read Water soaks up the cash).

Dreesen said, "A lot of people jumped in looking at solar, and looking at biofuels, and seeing that those were markets that were primed for rapid growth, and I think people are looking at the water markets and coming to the same type of conclusion."

Cleantech.com is hosting a webinar on the cleantech water sector on Nov. 27 (check out The quiet profits being made in water today). [link removed]