Why we invested in Datatecnics

Water is often seen as a relatively unloved part of the environmental cause – especially in the UK – it seems so abundant here, so the urgency for action is often missing. 

However,  water distribution networks in the UK – as well as Europe and the United States – are in a state of disrepair, which results in millions of litres of water leaking away every year. Not only is there an environmental impact to this wasted water ( including the chemical and CO2 footprint of treated water literally just going down the drain) but there is also a substantial financial cost.

This is exacerbated by the current cost of living crisis; it is politically unpalatable to give water companies the freedom to raise prices, and the regulated pricing structure means that utilities’ budgets are rather lean when it comes to finding spare funds to invest in network optimisation.

In fact, European Environment Agency estimates the cost associated with repairing the European water infrastructure stands at about €2trn to fix the 600,000 bursts per year that occur over the 3,500,000km of water mains.  And that’s without taking into consideration preventative maintenance or more strategic work. 

The water industry also contributes 1% to the UK’s GHG footprint – a meaningful number compared to any other single industry or product / service. As you can see, the problem is vast, complex and multifaceted.

Enter Datatecnics – a cleantech start-up that uses sensor technology, embedded in both new and old pipelines, and AI to help utilities to understand the health of their infrastructure. What makes Datatecnics unique are their algorithms, developed over 5 years at the most eminent water engineering universities in the UK. These algorithms are combined with sensors directly monitoring the pipe’s structure to create unmatched asset health forecasts.

As an example of the value of Datatecnics’ technology – CIPPS(®), one of its customers achieved full ROI on a pilot in less than 8 weeks. This was achieved by identifying and quantifying irregular stress events on a pipeline and making recommendations to reduce this stress. By deploying sensors, and combining this with an intimate knowledge of material fatigue, Datatecnics are able to give utilities unprecedented knowledge of their asset health.

Through CIPPS®, Datatecnics is able to provide utilities with an increasingly rich and granular sets of insights with respect to the strength and state of their infrastructure, enabling them to make more accurate investment decisions based on their actual, bespoke needs.

Market and customer: Infrastructure-related industries are famous for their long sales cycles and the complexity of their procurement processes. Whilst this may be the antithesis of most lean and agile start-up doctrines – once these processes have been successfully navigated they yield long term, sticky, contracts,  embedded within strategic procurement frameworks resulting in low levels of churn compared to nearly every other type of industry.

Datatecnics has been successful in securing a number of these UK contracts, and is now in the process of leveraging this momentum in order to sell to utilities across the continent. 

USP: This is a company that has a broad technology suite. Its core offering CIPPS® is unique for installing sensors directly to the pipe wall for continuous, long-term monitoring; a service not offered by any other competitor. The data that Datatecnics generate gives them a privileged, unfair advantage – they have the highest quality data to be able to generate asset health predictions, combining high-quality sensor input with machine learning algorithms, developed in conjunction with the Universities of Sheffield and Exeter. This is a company leveraging state-of-the-art AI and IoT technology.

Team: Datatecnics CEO, Suhayl Zulfiquar, has been building strong, collaborative relationships with innovators, researchers and companies the UK water sector since 2017. He has developed not only a best-in-class product, navigating key stakeholder and technology challenges, but a multi-disciplinary team of talented, dedicated engineers. This is a team set to deliver a major transformation in the quality, resilience and strength of the UKs water infrastructure. 

Impact:  Whilst in the UK water scarcity is not (always) a headline issue, in other parts of the world it is acute and immediately palpable. This is compounded by the historically poor state of infrastructure intelligence in the water sector. Regardless of where this technology is ultimately deployed, improving knowledge of our buried infrastructure is critical to the resilience of our natural resource utilities, reduces the GHG footprint of one of the UKs largest polluters, and will help to relieve the pressure on UK consumers during what is set to become a period of acute cost pressure.

Combining all of these factors, we’re really excited about supporting Suhayl and his team to grow and deploy this exciting and promising technology across both the UK, and the rest of the world.

Be sure to watch this space for further updates on mission-driven teams building great businesses – we’re going to be backing quite a few 🚀

Jake Wombwell-Povey, Investment Director.

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