Business Model Development & Profitability in the Water Sector

The following article by Africa Funded CEO Saskia Reus-Makkink builds on knowledge gained in various assignments and seed funding programs around business and water. We drafted the picture shown below based on our experience in this area. It is work in progress and can be completed with further deep dives in the market.

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We use the illustration above to explain development of pionering business models. On the left side is the validation stage where entrepreneurs design models and pivot based on reality. After market experience, a business model starts to stabilize. At this stage, early stage (grant) funders often expect investors will come on board. But most companies are not yet ready to scale (lack organizational structure, team, etc). Africa Funded provides support in gap analysis to scale and customized business development tracks and advice on catalytic use and blending of funds to get companies ready to scale. The picture is a mapping of our impression of business model development of water related business models:

  • Rain water (also 3R: Recharge, Retention, Reuse) models have solid technology solutions, but the commercial part is still in development
  • IT/Mobile solutions: High impact possible in improving performance of all water business models by using mobile / IT solutions. Limited deal flow now, as most solutions server short term donor project needs. Join us in talks with different actors in this area to assess opportunities in more detail.
  • Circular business models: We screened 13 of the leading companies for a consortium of multinationals aiming at identifying partners for sustainable sourcing of materials. Models include fecal sludge to biogas, fertilizer, flying foods, etc business models. They provide opportunity to reduce costs in the value chain. Most models are in advanced pilot stage
  • Smart Water for Agri: We currently are executing gap analysis to scale for solution providers in this area. Only 6% of agri land in africa is irrigated. High potential. Early market adopters. Diverse activities in this space to support market development. Very promising
  • Safe Water Enterprises: In rural areas often require blended finance, in high dense urban (slums) area can be profitable
  • HWTS: Household water treatment services (eg filters). No complex business models, more a volume game in selling and replacing the solutions. 

The analysis shows Smart Water for Agri and ICT/Mobile have most potential for commercial scaling activities. Again, the analysis is work in progress and can be completed with further deep dives in the market. We welcome you to connect with us on our work in assessing and supporting companies in early growth stages in Africa. 

Saskia Reus, CEO Africa Funded

Analysis based on: Managing seed accelerator programs for water & sanitation in 2014-2018 (A4A, UNESCO VIA Water, Smart Water for Agriculture Kenya). Managing deep dive study into 14 Safe Water Enterprises, Assess opportunity to scale 24 sanitation businesses (2016), market assessment IT/Mobile (2017), Investment Committee roles, water & sanitation expert feedback

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