ImpactAlpha, Jan. 6 – Water is a hot topic. This summer, thousands gathered at the annual World Water Week conference in Stockholm, where a Water Scarcity Clock was launched to measure in real time the number of people at risk (currently 2.3 billion and rising). But for Grégoire Landel, a water engineer who has worked on water projects in 40 countries, water scarcity has been a familiar challenge for years. That experience led Landel in 2016 to found CityTaps, which offers a smart metering and mobile payments system to help bring running water to developing country urban households.
The Paris-based startup raised €2.2 million in late December from Singapore-based family office Inheritance Enterprises and the Vitol Foundation as well as from existing investors to fuel its growth.
The World Health Organization (WHO) estimates that 830 million people worldwide lack household water. In some cases the water network does not reach the household, and in others low- income families have lost their service due to unexpectedly large bills that go unpaid for months.
As a result, family members – often women and girls – leave home every day to search for water, at a significant cost in money, time and health. Water purchased from private vendors can cost 10 to 30 times the normal regulated price, and can be contaminated.
The situation also affects the ability of water utilities in developing countries to provide reliable service to the local community. Unpaid bills and disconnected subscribers mean lost revenue. Issuing, collecting and writing off bills and sending teams to disconnect service increases expenses. Globally, utilities miss out on nearly $20 billion a year in revenue, says Landel, decreasing capital available for investment in water infrastructure to serve low-income urban populations.
Removing barriers
CityTaps’ B2B solution for water utilities aims to address these challenges. Called CTSuite, it includes a smart, prepaid water meter (CTMeter) installed at subscriber households and cloud-based software that provides financial and operational data to both customers and utilities. CTMeters offer subscribers the simplicity and transparency of a prepaid phone card, eliminating the surprise of an unexpectedly large or unpayable bill. And the upfront customer payments and decreased costs strengthen the financial position of utilities, which pay a monthly per-meter subscription fee to CityTaps.
By boosting the financial health of utilities and making it more economically viable for them to connect low income households to water service, Landel hopes to remove a barrier to water investors who may have traditionally been hesitant to back utilities as a way to address an important part of the UN’s Sustainable Development Goal 6 for water and sanitation.
Solutions like CityTaps’ can “help to unburden water utilities and free up capital for investment to improve and expand water infrastructure for people who may not have access,” said Benjamin Gardner, president of the infrastructure market intelligence Northeast Group.
CityTaps first began work in late 2016 in Niamey (population 1.2 million), the capital city of the West African country of Niger, one of the poorest countries in the world. The company partnered with the local water utility, S.E.E.N., a subsidiary of French multinational Veolia, and French telecommunications company Orange, which provides the mobile payment system, on a pilot test of 20 water meters that received funding from the GSMA Mobile for Development Utilities Innovation Fund. S.E.E.N. has since installed 1,400 units.
A CityTaps survey of heads of customers in Niamey found that the 94% of households saved money on water. They also reported saving time and a perceived improvement in their health.
African expansion
CityTaps initially raised “friends and family” money and won several grants and prizes, including a $500,000 award from U.S. telecom company Verizon. In December 2018, the company raised $500,000 in convertible notes from the Global Innovation Fund (GIF), and in 2019 it was awarded €1 million in non-dilutive funding from the French government. CityTaps could help “make existing water distribution networks more efficient, and improve access to water and the reliability of that access for people living on less than $5 per day,” said GIF Investment Director Avinash Mishra.
The company is now expanding throughout Africa. It is preparing to start a new project in January 2020 in the Kenyan city of Malindi which will cover 30,000 customers, and expects to expand country-wide in 2021. The Orange team in Burkina Faso has also purchased CTMeters for sale to the local water utility.
CityTaps is starting to sell its solution to utilities on a lease-to-own basis. It hopes to raise a debt instrument of €2 million to €5 million in 2020 – and much larger amounts as the commercial rollout expands – to enable the company to extend leasing terms to its utility clients. The lease payments can be backed by the pay-as-you-go household payments, which could feasibly go directly to investors. The cloud-based data generated by the CityTaps system provides investor transparency as well.
