At Physic Ventures we just announced our most recent Sustainable Living investment. This was a seed stage investment in WaterSmart software, a company that produces SaaS software tools for utilities to accelerate the adoption of residential water efficiency programs and engage consumers in water efficiency. You can read the press release here. WaterSmart is a high profile company that has generated a lot of investment interest and commentary in the Cleantech blogs and sites like Angel List. In this posting I discuss why Physic is excited to be investing in WaterSmart and how this investment fits within our broader Sustainable Living investment thesis.
How Does WaterSmart fit with Physic’s Sustainable Living investment thesis?
The Physic investment process is thesis driven. We continually review the investment sectors where we believe we can identify attractive investments, provide proprietary insights and add strategic value. Water, and in particular, consumer water usage, has been one of our priority sectors since the beginning of our Fund. There are several macro reasons, beyond the scope of this posting, why we believe that water will remain an attractive investment sector.
In addition to identifying attractive investment sectors in our investment thesis, we also look for themes in business models, enabling technologies, consumer behaviors and regulatory pressures that cut across our investment sectors and influence which investments are likely to be most successful. One of the key themes within our Sustainable Living investment practice is Resource Efficiency, or “The 4R’s”; Reduce, ReUse, Recycle, and ReCommerce. WaterSmart is the perfect example of an investment at the intersection of our water investment sector vertical and our 4R horizontal theme. The table below shows the other themes in the Physic Ventures Sustainable Living investment thesis and how our current portfolio aligns with this thesis.
What are the synergies between WaterSmart and other Physic portfolio companies?
One of the advantages of the thematic process by which we select investments is the natural synergies that arise between portfolio companies within a given theme. Through our investment in EnergyHub we have deep expertise in how to pilot and sell efficiency solutions to Utility companies. We also understand how to design a resource efficiency solution that will be engaging and appealing to consumers. This is a core part of WaterSmart’s strategy.
WaterSmart is the first seed investment that Physic has announced. What is your seed stage investment strategy?
The Physic Ventures investment strategy is to look at investments spanning from seed stage to later stage venture investments. The core of our investment focus is on venture stage investments from Series A to C. However, we do invest at the seed stage when we have proprietary insights into the technology or market sector that the company is pursuing. Additionally, if we see an opportunity to leverage the company building expertise that we have on the Physic team or if we can tap into the resources in our ecosystem of strategic partners to rapidly accelerate the growth of the company then we will consider investing at the seed stage.
We view these seed investments as a way to generate proprietary venture stage investment opportunities for our fund. They provide us with a way to add value to the company at an earlier stage and help it grow into an opportunity that fits with our core venture investment strategy. WaterSmart is a great example of this strategy. Own Products is another example of a seed stage company that was incubated by an EIR working at Physic and grew into a venture investment for our fund. We have other seed investments which are in stealth mode. Physic is also in active discussions with a number of seed stage entrepreneurs in the consumer-health and sustainable living sectors and we would be delighted to review additional opportunities.