Disrupt Battlefield finalist Valor Water is graduating out of Y Combinator just in time to help solve the world’s water crisis. Valor provides a suite of business-intelligence tools for water utilities.
In a drought, consumers are encouraged to conserve water and they often do. In California this past December, conservation was up from 10 percent in November to 22 percent in December, in year-over-year water-use comparisons done by the State of California. Since July 2014, consumers saved 134 billion gallons of water or enough to supply 1.8 million residents with water for a year.
But with that conservation comes a challenge for utilities: decreasing revenue. For every gallon conserved in a drought, that’s one more gallon a utility is not earning money on, over time putting the provider in a very precarious financial situation. Utilities, fearing for their survival, often end up issuing rate hikes to maintain revenue. This leads to a cycle whereby consumers are no longer incentivized to conserve, as they’ll end up paying the same water bill regardless.
Growing up in the Pacific Northwest, Valor founder Christine Boyle has long been familiar with the role water plays in society. She explains that whether you live in an urban or rural community, are trying to grow food or want basic sanitation, “if you don’t have access to water, you probably have a pretty poor quality of life.”
It is this sentiment that brought her to University of North Carolina where she pursued her doctorate. Like most water scholars, Boyle began her studies focused on water quality and wastewater management.
In 2007, everything changed. A major drought hit the Southeast United States causing North Carolina and Tennessee to experience the driest year on record. The drought led to restricted water use for citizens, extremely low reservoir levels, damaged crops, limited energy supply from regional hydro and nuclear power and went so far as to cause conflict between states trying to claim ownership of what few water resources existed.
For every gallon conserved in a drought, that’s one more gallon a utility is not earning money on, over time putting the provider in a very precarious financial situation.
With all of this, Boyle saw local utilities struggling to stay afloat. Conservation efforts had caused the City of Charlotte to lose $19 million that year. Even smaller utilities were coming up $1-2 million short of their expected revenue. Their only solution was to increase rates on the customer in hopes of maintaining their ability to provide water.
It was at that time in her PhD that Boyle began working with local utilities to find alternative financial strategies that could help them weather the crisis. She began analyzing utility data to more effectively segment their users and understand consumption at a more granular level, leading to targeted rate adjustment and pricing tiers that were more efficient. They also highlighted customers with potential leaks, broken meters or mis-reads, leading to potential “hidden” revenue.
In the years that followed, Boyle continued to consult for U.S. water agencies while completing a Fulbright Fellowship in China, also focused on financial water management. When she returned to the U.S., the demand for her services continued to rise.
“Originally, I didn’t think of the services I was providing as a product,” Boyle explains. But as a consultant, she added, you are usually involved with a utility over several months, typically on a project basis, and often are brought in too late in the game to make significant improvements. Ultimately, utilities need a tool they can be using in their day-to-day operations.
That’s when Boyle began to create Valor Water Analytics. The company first had to secure the right to use the technology from UNC and today has a non-transferrable, global license from the university for the financial tools Boyle developed as a graduate student.
We first heard from Valor in the Battlefield at Disrupt SF this past fall when it launched its Drought Conversation Toolkit. Today, it added additional backing from both Y Combinator and ImagineH20 accelerator programs.
Valor’s West Coast location puts the company in a good position to expand. Since launch, the team has brought four California utilities on-board with its system including the Sonoma County Water Agency. With this customer, they have released a case study to assist others in the water space understand the planning process.
Valor has worked quickly to diversify its product offerings. On top of the Drought Toolkit, Valor now offers four additional products as part of their subscription service — Hidden Revenue Generator, Water Revenue Profiles, SMART Targets and Cutoff Analyzer. These tools enable more detailed customer segmentation, water consumption and payment trends. The Cutoff Analyzer allows utilities to model the impact of proposed future rate changes on their customers to predict how behavior and thus revenue could change.
Using Valor, existing utility customers have experienced an average of 6 percent net revenue increase and are using that money to invest in infrastructure and ensure water continues to be affordable to communities.