Startups as Economic, Social and Environmental Solutions

(Written in collaboration with Agustín Castillo, General Manager at Casagua)

The emergence of startups has represented a global phenomenon in the fields of entrepreneurship and innovation. As a result, many young people have oriented their professional and economic development toward this ecosystem of opportunities.

While very fertile, this ecosystem is not without challenges, such as job creation or climate-change compliance. However, it hosts perspectives that aim to generate solutions by intertwining creativity, technology and the spirit of radical changes.

Startups are “new creation” companies; they are characterized by being businesses with innovative ideas and a great will to satisfy the needs of the market. In Mexico, the investment ecosystem has been steadily expanding. Since 2017, venture capital investment in Mexico has multiplied more than four times. For example, in 2021 a set of 100 Mexican startups raised US$506 million. In the context of the “boom” of the unicorns in Latin America, four of them are Mexican: Kavak, Bitso, Clip and Konfio.

Startups market products and services through the intensive use of information technologies (ICTs), with a flexible business model that allows rapid and sustainable growth. This strong technological component allows them to scale their business in an agile, fast way with a lower capital requirement compared to traditional companies.

In the water context, traditional technology solutions have proven insufficient to solve the challenges. For this reason, there is an urgent need to develop innovative solutions to solve the issues of water scarcity and quality at a global level.

Accordingly, ICTs, the development of software, hardware, applications, algorithms, artificial intelligence (AI) and data science have been of the utmost importance, allowing new ventures to develop technological solutions and expand their possibilities, as well as making operations, benefits and risks transparent.

We can see that in the context of startups, they can innovate technologies that seek to solve social and/or environmental problems. For example, innovation in AI offers opportunities to face global environmental challenges in terms of climate change, biodiversity and conservation, ocean health and water security, among others, specifically by providing management efficiency, starting with data transparency.

How? For example, the creation of digital water systems for smart water management allows governments and companies to develop water infrastructure supervised by a seamless management process that can permanently adapt how they deal with any situation or emergency.

On the contrary, the lack of information and technological infrastructure makes it impossible to provide a clear answer to efficiency gaps. To exemplify this context, it is estimated that 38 percent of Mexico City's water is wasted through leaks within the hydraulic network. However, with a transparent monitoring network and the right devices, innovative technologies can be deployed at strategic points so that the right solutions can be generated and mitigate this problem.

Likewise, at the household and consumer level, the automation and optimal use of pumps or leakage tracking could be adapted from the data that a digital water system can provide. In this way, two issues can be addressed: 1) the impact on the consumer’s pocket from repairs; and 2) waste from water leaks that are not fully visible.

In Latin America, the Inter-American Development Bank estimates that AI will generate a positive impact on expected economic growth of US$2.8 billion by 2025. This will be driven by the emergence of startups. This can also lead to economic, social and environmental solutions for the region. Meanwhile, in Mexico, 14 percent of ICT professionals affirm that their company uses AI and more than 57 percent of Mexican companies are exploring the adoption of this technology.

It is optimal to mention once again that these information systems, the use of software, hardware, process improvement, and other conditions facilitate the secure management of information, massive data processing and support for the digital transformation of the actors related to the water sector. Expanding, accelerating and diversifying these tools within the government, business and public sectors strengthen governance and democracy, positioning data transparency as a value for economic growth, environmental security and social welfare.

Finally, an example of an undertaking of these characteristics developed by a group of young Mexicans guided by environmental engineer Andreas Weingartner, founder of the transnational company of water technologies, s::can, is called casAgua.

What is casAgua? It is an unconventional investment fund, which seeks to incubate water and energy startups, initially with seed investment rounds and specifically with products related to ICTs that can make the management of both resources efficient, useful and accessible to all people, through the transparency of quality, expenditure or consumption data.

Currently, casAgua is promoting its first investment call (from Jan. 17 to Feb. 11) to find ideas, concepts or business projects at an early stage with the aim of achieving stability and economic security. Being selected and being part of the casAgua startup ecosystem entails the following benefits: mentoring and knowledge in company management, technology, office and workspace, testing laboratory and an investment of US$300,000 to US$3 million.

Based on this, casAgua seeks to contribute to the country with the development of innovative startups that offer radical solutions and that really generate a positive impact in the areas of economic, social and environmental development, as well as profits and profitability for startup entrepreneurs.

References:

Romero, C. E. (2021). Journalism, academia and information to combat corruption in water management. Impluvium. Retrieved from http://www.agua.unam.mx/assets/pdfs/impluvium/numero16.pdf

Stankovic, M, et al. (2020). Use of 4RI technologies in water and sanitation in Latin America and the Caribbean. Inter-American Development Bank. Retrieved from https://publications.iadb.org/es/uso-de-tecnologias-de-la-4ri-en-agua-y-saneamiento-en-america-latina-y-el-caribe

Startupeable (2021). Venture Capital Mexico: Ecosystem Map (2021). Recovered from https://startupeable.com/venture-capital-mexico/

Velasco, M. (2021). Access to Information, Co-responsible Water Governance and Digital Government. Impluvium. Retrieved from http://www.agua.unam.mx/assets/pdfs/impluvium/numero16.pdf

Helene Dotsch. (2021). The Mexican startup ecosystem faces new obstacles, but is gaining strength like never before. The Entrepreneur. Retrieved from: https://www.entrepreneur.com/topic/entrepreneurspecials#:~:text=The%20Mexican%20startup%20ecosystem%20faces%20new%20obstacles%2C%20but,million%20dollars.%20By%20Helene % 20D% C3% B6tsch% 20December% 2014% 2C% 202021

Melisa Osores. (2021). AI adoption grows in Mexico driven by the pandemic and digital transformation. Computer Weekly. Recovered from: AI adoption grows in Mexico driven by pandemic and digital transformation (computerweekly.com)

Mirjana Stankovic. (2020). Use of 4RI technologies in water and sanitation in Latin America and the Caribbean. Inter-American Development Bank. Retrieved from: https://publications.iadb.org/publications/spanish/document/Uso-de-tecnologias-de-la-4RI-en-agua-y-saneamiento-en-America-Latina-y-el-Caribe .pdf

Héctor Fernández. (2022). What is a startup ?. ICT economy. Recovered from https://economiatic.com/que-es-una-startup/