BOSTON, US – US company Oasys Water is exploring a sale of its forward osmosis (FO) technology IP after its cash-flow has run dry.
The company became a much-needed success story for the niche FO technology, winning numerous industry awards and securing multiple rounds of funding. So what happened?
The company was founded in 2008 by Rob McGinnis, developing technology which began at Yale University under Dr Menachem Elimelech. McGinnis then directed technology development as CTO until 2012.
The firm closed $10 million in Series A financing in 2009 and raised a further $15 million in Series B funding five years later in 2013.
Oasys drove forward forward osmosis technology development for industrial applications, namely the treatment of produced water in the US oil and gas market and zero liquid discharge projects (ZLD) in China.
However, following the oil and gas market crash, the company decided to concentrate on the Chinese market with local partner, Beijing Woteer.
Last summer, the two companies secured three further projects in China – with one almost five times the size of Oasys’ first commercial project at the Changxing power plant.
The plan was to then create a merged company – Oasys+Woteer – and raise capital to support the new group’s growth strategy.
However, at the end of October the company was informed that the financing was “no longer available”, reported the Water Desalination Report.
Oasys Water was then forced to suspend operations and make staff reductions, with the business effectively out of cash.
Jim Matheson, CEO of Oasys Water, reportedly said: “We are now working with out debt providers and creditors to manage the situation as we rapidly explore alternatives, including selling the Oasys technology, IP, manufacturing facilities and contracts, or finding a path to finance a restart of the company while working through the complex set of issues associated with such an abrupt change in plans.”
The CEO said the company is working with Barclays Global Investment Banking Team to execute a “very rapid” asset sale, with bids due by the end of this year.
Although the firm was unavailable for comment, Matheson confirmed that the company was in the middle of a "tight sale process".
When Oasys Water was founded in 2008, it was planning to be a seawater desalination company. However, in 2014 it pivoted to focus on ‘challenging waters’, which was solidified the next year when the mission statement was changed to focus on high recovery desalination, brine management and ZLD.
According to Paul O’Callaghan, CEO of BlueTech Research, it was during the first six years that the company was trying to “find its groove”.
He told WWi magazine: “What finally tripped up Oasys was they simply ran out of runway. There has been $70 million invested and with each subsequent funding round it becomes a challenge to maintain the belief in the upside. I believe they have certainly achieved a great deal.”
He added: “What we see with quite a number of companies, is that what they start out as, is not always what they become. They can spend a few years lost in the wilderness before they find themselves, and find their groove. Unfortunately those years in the wilderness, albeit great learning years, can mean they are a few laps behind in the race that is water technology development.”
Oasys Water is not the only company to have struggled with scaling up a forward osmosis business, despite opting for the industrial route.
UK firm Modern Water was another industry sweetheart touted for success with its FO technology. However, despite initial achievements in Gibraltar and Oman, the business struggled to really develop momentum with FO, particularly in China.
The difference between the two companies and the saving grace of Modern Water has been its monitoring division, providing steadily increasing revenues. For example, in the first six months of 2015 monitoring division revenues increased by 7 percent to £1.56 million, compared to £1.46 the previous year.
Both examples demonstrate that the forward osmosis market is an extremely difficult nut to crack.
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Read more
Forward osmosis triple whammy helps Oasys Water maintain momentum in China
Forward osmosis: Rethinking a maverick technology
Desalination shake up: Forward thinking membrane developments
