Closing the Loop on Wastewater with Gradiant
Prakash Govindan is COO and Co-founder at Gradiant.
Gradiant is a Series D stage company that develops technology for industrial wastewater treatment. They work with Fortune 500 clients across a range of industries, including semiconductor fabrication, food and beverage, pharmaceuticals, mining, and more, to help them reuse water in their operations.
Prakash discusses his background, experiences with water scarcity during his childhood in India, how he met his co-founder during his doctoral work at MIT, how the company started, and the problem of industrial wastewater today. Cody and Prakash talk about some of the different industries and use cases that Gradiant serves, a bit about how their technology works, and how their business model is structured.
As Prakash says in the conversation, water is one of the primary interfaces through which the world will experience climate change, whether through drought or flood. The more we can do to manage our water supply, the better off we will be.
Episode recorded on Jan 5, 2024 (Published on Feb 8, 2024)
In this episode, we cover:
[02:35]: Prakash's early experiences with water scarcity in India
[04:09]: Gradiant becoming the water industry's only unicorn
[10:21]: How climate change primarily impacts society through water
[11:52]: Gradiant's role in closing the loop on industrial wastewater
[18:25]: The challenges of industrial vs. municipal wastewater treatment
[22:22]: Gradiant's bespoke water treatment solutions for the pharmaceutical industry
[26:17]: The company’s involvement in direct lithium extraction and production processes
[30:52]: The importance of seawater desalination and minimizing brine discharge
[38:03]: How Gradiant collaborates with semiconductor clients under the CHIPS Act
[41:50]: Gradiant's approach to extracting valuable byproducts from waste
[45:06]: Early funding for Gradiant from high net-worth individuals and family offices
[46:01]: Gradiant's revenue and backlog growth, anticipating future financial milestones
[48:38]: The story behind the company name, Gradiant with an “A” instead of an “E”
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Cody Simms (00:00):
Today, on My Climate Journey's Startup Series, our guest is Prakash Govindan, COO and Co-Founder at Gradiant. Gradiant is a series D stage company that develops technology for industrial wastewater treatment. They work with Fortune 500 clients across a range of industries, including semiconductor fabrication, food and beverage, pharmaceuticals, mining, and more, to help them reuse water in their operations.
(00:31):
Prakash and I discuss his background and experiences with water scarcity during his childhood in India. We talk about how he met his co-founder during his doctoral work at MIT, how the company started, and the problem of industrial wastewater today. We talk about some of the different industries and use cases that Gradiant serves, and a bit about how their technology works, and how their business model is structured.
(00:56):
As Prakash says in the conversation, water is one of the primary interfaces through which the world will experience climate change, whether through drought or flood. The more we can do to manage our water supply, the better off we will be. Before we start, I'm Cody Simms.
Yin Lu (01:14):
I'm Yin Lu.
Jason Jacobs (01:16):
I'm Jason Jacobs, and welcome to My Climate Journey.
Yin Lu (01:22):
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (01:27):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change, and all the ways people like you and I can help. Prakash, welcome to the show.
Prakash Govindan (01:42):
Hi, Cody. Thanks for having me.
Cody Simms (01:44):
Prakash, I am super excited to learn from you today, understand the world of industrial wastewater. From the reading I've done leading up to our conversation, I really came to appreciate the size and scope of what you do, and what you work on, and how it relates to industries I didn't really think of as being large water consumers, like semiconductor fabs, as an example.
(02:11):
Clearly, that's an incredibly critical area to be working on from a advancement of technology perspective, from a national security perspective, from where the world is going perspective. I'm really excited to hear more about your story. Maybe let's start with you giving a personal introduction, and how you originally came to found Gradiant.
Prakash Govindan (02:35):
I grew up in south of India in a city, a metropolis called Chennai. It used to be called Madras. It's the capital of a southern state called Tamil Nadu. Madras famously has droughts, or infamously. The Indian water situation depends on the monsoon. Tamil Nadu is one of the states which gets the return monsoon, and sometimes it never returns so there's no rain.
(03:01):
When we grew up, me and my brother, lower middle class, nice household in Chennai, there were a lot of water problems, a lot of droughts, so we didn't get tap water for part of the year. We would receive water in trucks, in trailers, and so it was our job as the end person in the family to walk down from our house and bring back water in pails, in buckets. We used to do that twice a week. There was a four-year period when I was in secondary school and high school, every week, we did this.
(03:38):
Very early on, I learned in life the value of water and the value of having tap water. What often happens, and one of the reasons that there is this mind-blowing statistic that in the history of water, in the history of water, you invest in startups, you're familiar, there has been only one unicorn, only one unicorn in the entire history of the water industry, whereas if you take energy storage, or photo types, or something like that, there's a unicorn every month in the US or other parts of the world.
(04:09):
Gradiant is that one and only unicorn in the history of the water industry. It's because people don't understand the value of water. Water is not valued correctly. That's something we're trying to change. Nonetheless, going back to my story, so we used to carry up these pails of water. I learned the value of water. When I got the opportunity to do my PhD at the Massachusetts Institute of Technology, MIT, I found the water guru at MIT, and I became the student and disciple, if you will. John Leonard the fifth is the water guru at MIT.
(04:42):
During my PhD, we developed technologies which were later on commercialized by Gradiant for recycling and reusing wastewater, industrial wastewater especially, but also applicable outside of industrial wastewater kind of applications. During those four or five years at MIT, I met Anurag. We were in the same laboratory, the heat transfer laboratory, and we were in the two groups that was working in water. From very early on, Anurag and I got along really well. We became very close friends.
(05:20):
He transmitted this entrepreneurial bug, this entrepreneurial disease, if you will, to me. He wanted to start a company, and for the better part of four years, we kept talking about how we can do that. It turned out that his aspiration, his mindset, and his nature was very much aligned to running the business side of things of a company. I'm a very technical person. I consider myself a finite time thermodynamics. We are people who think about entropy, and DK, and optimizing systems to the extent we lose our hair, as you can see.
(05:54):
It's a nice fit. The two friends with PhDs, practically unemployable anywhere else. The commonality between Anurag and me is also that we never had too much of materialistic aspirations. We didn't want to become billionaires, or we didn't have targets in terms of how much money we wanted to make. Impact was always our goal, honestly, from the bottom of my heart. Water is somewhere we could make an impact. Right at that time in the US, there was this Shell oil, Shell gas boom.
(06:31):
US went from being a net importer of oil to a net exporter of oil, and the largest producer of oil at one point in the world in a period of five to six years during the time we started Gradiant. This hydraulic fracturing, this unconventional Shell gas, Shell oil, required a lot of water to frack and to deal with the waste, also. Gradiant had the ideal solution of recycling 99% of the water within the oil field, making oil companies water sustainable. That's where we started, but we diversified into other industries.
(07:09):
You mentioned semiconductor. Oftentimes, people don't know that an average semiconductor foundry, a fab, consumes 10 million gallons of water a day. Gradiant has technology which can recycle 99% of that within the industry. Instead of tapping into outside sources like surface water, or [inaudible 00:07:30] water, the Mississippi River, for example, to run the foundry of the tune of 10 million gallons, they only need a hundred thousand gallons with Gradiant technology. That was game changing.
(07:39):
We are doing really well in those sectors, semiconductor, food and beverage, mining, oil and gas, and similar sectors. That's how we got started, two people out of a lab at MIT. Now we are more than 1,100 people. We have offices in more than 10 countries, and I live in Abu Dhabi.
Cody Simms (08:00):
You just moved from Singapore. You've been all over the place.
Prakash Govindan (08:03):
Yes. When we started, we were initially laser-focused. We had one technology, one application, but after the first five, six years of Gradiant, we had built up enough capability and credibility to not only go raise money to expand into other applications and build a technology platform, a full stack of technologies that can service different industries, but also, we had capability to solve local industrial problems around the world.
(08:32):
I moved after first six years of Gradiant to Singapore, then another five years in Singapore. Now, I have moved to the Middle East, and as excited as I was on day one.
Cody Simms (08:43):
I saw on your website for Gradiant that you have a couple incredibly powerful statistics. 45% of the world's water is used by industry, and traditionally 70% of that wastewater is then dumped, untreated into nature. How is, A, that's mind-boggling. I don't know how much of that number of that 45% includes agriculture relative to some of the heavier industries that you work with? B, 70% dumped into nature feels like the EPA and other organizations would have regulated that away by now, but clearly, that is not the case.
Prakash Govindan (09:23):
That 70% number is actually very quite generous, in that it includes highly regulated regions, Europe and Australia, for example. If you take some of the more populated, more where there is a lot of manufacturing and industry, China, India, Asia in general, it's more like 95% of the wastewater is dumped into oceans, and rivers, and underground water bodies.
(09:52):
The US, especially over the last several years, the EPA has taken a very forgiving stance towards industry polluting water bodies in the US, fortunately. Previously, there was a pretty strict regulations, but recently, maybe five years ago or so, it became slightly more forgiving for industry to pollute. It is a mind-boggling statistics, and kudos on you to look at the website and learn that, but it is very much true.
(10:21):
If you think about climate change, which is the topic of your podcast, climate change almost invariably, in all cases, first affects society through water, either in the form of too much, floods, or too little, droughts, and securing our water resources and the reduction in sea water levels in the atmosphere. I'm an optimist, I believe that will happen.
(10:47):
Everybody will come together, realize the... I was at COP 28 recently, and I feel optimistic that eventually, people will come together and get to minimize C02 levels in the atmosphere as is required, but it will take time. Consensus, even at COP 28, you can see, even though the tagline was "Climate action," there was very little of that. There was a lot of rhetoric rather than action.
(11:15):
In that interim time, we have to secure our water bodies. We have to make sure societies have a water to survive, if not thrive. What people don't know, perhaps the common man I mean, is the importance of recycling industrial waste. One, stopping industrial wastewater from being discharged into natural bodies, and two, minimizing the withdrawal of fresh water and potable water by industries. Doing that, how important it's to fill that gap before CO2 is controlled and of the climate crisis.
(11:52):
That's where Gradiant comes in is we close the loop. We have, for the first time in the history of the water industry, Gradiant has technology which can take the wastewaters, the top six streams coming out of these industries, and clean it up to a level where it can be reused within the industry. For semiconductor, like I said, 99% can be reused for oil and gas. Almost 100% can be reused. It's a big deal there.
Cody Simms (12:20):
I want to back up a minute to the topic you mentioned, which is you said in some emerging economies upwards of 95% of industrial wastewater is dumped into natural bodies of water. To me, it evokes the question that comes up a lot in the energy context of environmental justice. What is the right of an individual nation state to develop its economy, relative to decisions it has to make about its own local environmental tolls?
(12:50):
This comes up a lot in terms of the use of coal, for example, in India and China. Should these countries be required to wean themselves off fossil fuels when what they're trying to do, in many cases, is catch up to the United States and Europe, which were able to develop on the back of fossil fuels, and now are trying to tell the rest of the world, "You can't do that."
(13:11):
It strikes me that with CO2, it is true, it's a global problem in that the emissions affect everyone, whereas with water, yes, obviously, water is, at some limit, is a scarce resource, but there is a lot of water. It's just often in the wrong places. Polluting water is more of a local problem than a global problem. Is that a correct way to think about it, or not?
Prakash Govindan (13:36):
Very astute observation. The environment sort of the atmosphere is solely, you have the air about UAE, you have the air about America, you have the air about India. The seawater levels are the same. Except for some local air pollution, the atmosphere is very, very linked. The oceans are also linked, but the effect of pollution doesn't transmit, say, for example, the Yangtze River in China, someone dumps pharmaceutical waste which contains trace compounds of something fatal. It doesn't affect people living the Mississippi River, necessarily.
(14:17):
One thing I really feel about climate change because of this reason, it starkly brings out the inequalities in the world. There is this island in the Indian Ocean near Australia which has 11,000 people, and they have lost 90% of their land because of seawater level rising, whereas they hardly contribute to the CO2 in the air. Bangladesh, for example, continues to lose significant amounts of its land and habitat, whereas they hardly contribute to CO2 in the air.
(14:54):
Whereas if you see it per capita, countries like the US, or certain European countries, or even China, in spite of its larger population, has a significantly higher impact on CO2 going out into the atmosphere every minute, every day. This is where these countries which are higher emitters can also invest in water technology, and equalize this injustice, if you will, to use a slightly strong term, because the technologies developed in the US, for example, Gradiant's technologies developed in the US and Singapore, can be applied in these situations.
(15:31):
We are working on very important projects in that regard in such regions in Bangladesh, for example, where we can help with making sure the water resource is secured for the local community.
Cody Simms (15:44):
I suppose no nation wants to pollute its own populace. They're having to make trade-off choices around development and advancement. Obviously, in some cases, things like corruption and whatnot do come into play, but for the most part, I presume many of these countries that are heavily polluting their water sheds would prefer to not do so. They need alternative technologies to help them prevent it.
(16:11):
They haven't developed an economic infrastructure such that they're incentivized against doing it, at least in the near term, unfortunately. I don't know if that's the right way to think about it or not.
Prakash Govindan (16:23):
It is, Cody. Great examples of China and India. Over the last few years, China has been cleaning up its act in terms of pollution to its water bodies. It has been inviting technology companies to be part of that mix. We partner with them. I believe we have a large grant with one of their city governments, [inaudible 00:16:43] near Shanghai. We are doing a sizeable team in China.
(16:46):
India is another very good example. India is one of the few countries which has stipulated zero liquid discharge requirements for its industries. It doesn't care. Whether you build a semiconductor factory which will create a million jobs, or you are building a small metal workshop, you have to not discharge any water from it. Zero liquid discharge means none of the waste goes out of the factory, and that, whereas there has been desire to do that earlier also in India.
Cody Simms (17:18):
How recent is that in India? Is that relatively recent?
Prakash Govindan (17:21):
Relatively. It was implemented earlier, but technology was the roadblock. The technology, as in, it was physically possible to do zero liquid discharge, but you had to boil off so much water, you would be putting so much CO2 emissions in the air and creating another different problem. You're simply moving the water discharge issue to a climate change issue.
(17:42):
Whereas with the technologies that are available today through companies like Gradiant, they're able to do that. India is putting down its first semiconductor foundry, and Gradiant is going to do the entire end-to-end water treatment with zero liquid discharge, 100% recycling of all water, self-sustaining this for the first time in Asia, completely self-sustaining in terms of water.
Cody Simms (18:08):
When I think of water treatments, historically, I think of wastewater, municipal wastewater, sewage. How different are the problems that you face in industrial wastewater from what municipal wastewater treatment facilities deal with?
Prakash Govindan (18:25):
When we started the company, about six months in, Anurag gave me a T-shirt. I love that T-shirt, I still have it, but probably put it in the washing machine so many times I can't wear it outside. It's all faded, but I still wear it to bed, honestly I love that. It's one of my favorite tees. It says, "Industrial wastewater" on the front and in the back, it says, "Variability is the hallmark." That's so true.
(18:47):
Variability, if there is one thing we have learned running Gradiant for 11 years, it would be that variability is the hallmark of industrial wastewater. Variability in water quality, so on not just a monthly basis, a diurnal basis. In the morning, you would get water, which has 5% salt in it and 2% organics in it. In the evening, from the same pharmaceutical plant, for example, you would get 10% salt and 4% salinity.
(19:19):
When you design separation systems or thermo mechanical systems as an engineer, it's very, very difficult to design for that level of variability. That's why industrial water treatment, wastewater treatment, is much harder than municipal sewage water treatment. Municipal sewage water treatment, the technology has existed for a long period of time. It's only willingness in some parts of the world to invest, and maintain, and run those facilities.
(19:49):
Of course, your previous conversation with the startup, there are opportunities to tap into it, including extracting valuable things out of that sewage, but that is more value add rather than inherent necessity to do treatment. Industry water is much harder to treat from a technical perspective and a technology perspective.
Cody Simms (20:08):
Got it. You're referring to the recent episode we published with Cedron Technologies, which folks should go listen to as well if you want to hear more about sewage separation and some of the cutting edge that's happening there.
Yin Lu (20:19):
Hey, everyone. I'm Yin, a partner at MCJ Collective, here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019, and have grown to thousands of members globally. Each week, we're inspired by people who join with different backgrounds and points of view.
(20:39):
What we all share is a deep curiosity to learn, and a bias to action around ways to accelerate solutions to climate change. Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made, as well as ongoing events and programming, like monthly women in climate meetups, idea jam sessions for early stage founders, climate book club, art workshops, and more.
(21:05):
Whether you've been in the climate space for a while, or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to MCJCollective.com, and click on the members tab at the top. Thanks, and enjoy the rest of the show.
Cody Simms (21:20):
Let's talk a bit about some of the use cases that Gradiant solves. You've touched on a little bit, semiconductor fabrication, you've touched on a little bit pharmaceutical. I know you do things in food and ag, you do things in precious metal extraction. You obviously got your start, as you mentioned, in the oil field. Maybe share a bit about the primary use cases, and some of the differences inherent therein.
Prakash Govindan (21:43):
The pharmaceutical example is something I love. When I first moved to Singapore, this very responsible, one of my favorite clients, the Fortune 100 pharmaceutical company came to us and said, "We have this problem. Our wastewater has this thing. The local utility, public utility board, PUB of Singapore," one of the best utility boards in the world, by the way, "They are saying they'll fine us if we continue to discharge this into their sewer."
Cody Simms (22:13):
I think I saw a use case on this in an article. Was this GSK specifically around amoxicillin and penicillin waste? Is this the use case you're hinting at?
Prakash Govindan (22:22):
Yes. None of the other water companies could offer a solution, and they were at their wits end. Gradiant went in, we took the wastewater, we tested, so we are a bespoke solution provider. We have 250 patents, we have 10 commercialized technologies, but we are not a technology company. Our business model and our service model to the customer is not that we sell a widget, or we license the technology or anything.
(22:48):
We do the end-to-end solution for them. We develop using our existing technologies, but with other pre-treatment and post-treatment, which is more off the shelf, we developed the end-to-end solution for this client. For the first time in Singapore, we did a zero liquid discharge system for this amoxicillin production facility, completely eliminating their problem, and minimizing energy and C02 emissions at the same time. That's the best case we are really proud of.
(23:18):
The semiconductor example, like you mentioned, we service large semiconductor clients around the world who, on the one hand, they require 10 million gallons a day of water, and not just any water, Cody. Semiconductor industry's unique here, because they make these chips of very small feature sizes, we are talking nanometers, cut that, and the water is the solvent often, which flows over during certain processes, this semiconductor material.
(23:48):
It cannot contain any contaminants which will interfere with the features that they're producing. They put ultrapure water, we're talking not parts per billion, not parts per trillion, parts per quadrillion purity. One in 10 raised to 16 parts of water, one part of contaminant can exist, that level of purity. At the same time, when this ultrapure water comes in contact with the different chemicals and substrates in the process of producing the microchip, it produces different kinds of toxic wastewater. This is the unique challenge.
(24:29):
Whereas in pharmaceutical, the unique challenge is the nature of operations, for example, one of the unique challenges. What I mean is an amoxicillin production facility, for example, is operated in batches. There will be a batch of a certain drug they will produce for a period of time, and then a batch of another drug, related, but another drug that they produce at a different point of time.
(24:53):
They do this in a way to minimize their operational costs from their perspective, but each of these batches has vastly different wastewaters coming to the plant. As the solution provider for the water treatment piece, you have to be able to handle these vastly different wastewaters. Whereas that is the challenge in pharmaceutical, the challenge in semiconductor is there are often 15 types of wastewater that comes at you. You can't just mix them, and commingle them, and treat them as one.
(25:26):
You need to provide specific solutions to several of them, and to have that breadth of technology expertise, and know-how, very few companies in the world can do it. Of all of those, sorry to toot my own horn, but Gradiant is the only one at this point which can recover 99% of the water and still do all of the water treatment. That technology edge. We have also been very successful with mining applications. Mining consumes a lot of water.
(25:58):
There are two aspects of it. One is extraction of valuable resources from brines. For example, lithium salars have become a major way of extracting lithium from mother earth.
Cody Simms (26:13):
This is DLE, or direct lithium extraction, I think is what I hear the industry talk about?
Prakash Govindan (26:17):
Yes, direct lithium extraction, and the subsequent production of lithium carbonate or lithium hydroxide in the process. Gradiant's technologies, typically, within that extraction process for lithium, you operate some of that water off. Above a certain concentration, you cannot use membranes. Let me, if you don't mind for a minute, get slightly technical.
Cody Simms (26:42):
Please. That was going to be my next line of questioning was how does this all work? Dive in for us, please.
Prakash Govindan (26:48):
If you have a saline water, it can be sea water, it can be lithium saline brine, and you're trying to extract fresh water out of it, and in turn, concentrate some of it. You typically use this reverse osmosis technique, which is it's a non-porous semipermeable membrane, in that it allows by osmosis through it, water, but it doesn't allow any salt.
(27:13):
In order for the water to go in the right direction from the saline stream to the fresh stream, you have to overcome something called the osmotic pressure. This osmotic pressure exists because there is salt in the water. You overcome that by reverse osmosis. You apply pressure on the water, and fresh water goes through the membrane. This is an amazing technique. This has been perfected over the last 40 years. Seawater diesel, for example, every drop of water that I drink, my family drinks, anybody drinks in the UAE, is desalinated water.
(27:49):
UAE doesn't have any rivers. Saudi Arabia has no reverse. For a country with a population of 30 million people, zero rivers, Cody. Just imagine that. They subsist primarily by seawater desalination. They take seawater, they extract fresh water through it, primarily by this reverse osmosis process. Before reverse osmosis was developed, they were using techniques which would [inaudible 00:28:13] operation. They would apply heat, they were re-operate water and condense it.
(28:18):
Highly energy intensive, very high carbon footprint, but it has been phased out by reverse osmosis. The limit of this reverse osmosis process, though, is you can go to only a certain level of salinity. If you take the sea water in the Gulf here, or the Indian Ocean, or the Pacific Ocean, the average seawater of the world is around 3.5% salinity. You can concentrate that 50%, which means if I take a hundred liters of water, and I pretreat it, and I send it to a reverse osmosis or RO membrane, I can produce 50 liters of fresh water and 50 liters of concentrated.
(28:58):
Above that salinity, the osmotic pressure goes exponential. It becomes asymptotic to the [inaudible 00:29:06] that you cannot extract any more fresh water economically out of it. What they typically do, for example, for lithium extraction application, you have to produce solid from the brine. You have to produce lithium hydroxide, lithium carbonate from the brine. Without increasing the salinity to those levels, you cannot. The initial extraction is done using reverse osmosis or RO.
(29:31):
The later extraction typically was done using U operation, and that is a problem, because U require enormous amounts of thermal energy to do a carbon footprint, availability of thermal energy, in remote locations somewhere in Australia or somewhere in Argentina.
Cody Simms (29:49):
These are these big brine pools that you see pictures of? Is that what we're talking about here, or is that something different?
Prakash Govindan (29:55):
They were trying to do brine pools also, but then you're reliant on the precipitation, and with climate change, the precipitation patterns are constantly changing. It's a mess. What Gradiant has been able to achieve is expand into a paradigm shift, where the applicability window of RO, we have this technology called Counterflow Reverse Osmosis-
Cody Simms (30:16):
RO being reverse osmosis?
Prakash Govindan (30:18):
Yes, CFRO, being Counterflow Reverse Osmosis, we are able to expand the applicability of RO. Using patented clever ways, we are able to, for the first time in the water industry, concentrate these waters all the way up to saturation of salt just using membranes, no evaporation, no thermal energy input. That is a game changer for the mining industry.
Cody Simms (30:43):
It sounds like it's also a game changer from a water desalinization perspective, though I haven't heard you talk about that much on any of your positioning, which is interesting.
Prakash Govindan (30:52):
Seawater desal is an interesting market for Gradiant, but not every seawater desal plant in the world requires a zero liquid discharge, because the ocean is so big, you can take water and typically concentrate it, and put the rest back into the ocean, but there's a penalty. At COP 28, I was on four or five panels, one of those panels with global lawmakers and regulators in the mix on the panel, we discussed just like a carbon credit, a brine credit if a company minimizes putting brine into the ocean.
(31:26):
Putting brine into the ocean has multiple effects. We think of the ocean as infinite. It is very big, but it's not infinite. Eventually, the amount of water being desalinated today, the amount of water being projected to be desalinated in the near future, the overall salinity of the water is going to go up. Even before that happens, locally, the marine life is significantly affected sometimes. I'm not an expert on marine biology, but if you talk to environmentalists, for example, this is one of their opposition.
(32:00):
For example, there was going, in Huntington Beach, California, there was going to be a large seawater desalination plant. They spent tens of millions of dollars, if not hundreds, to do all the work to set that up, but the permit never came through. It was canned because of this specific concern. Applications like those, Gradiant can go in. In applications in Saudi Arabia, we are already doing that, go in using CFRO. We can reduce and minimize the amount of brine coming through.
(32:28):
We can even produce salt from that seawater extract. Not just common salt, but we can extract other kinds of minerals from that seawater. You're spot on. That's an application for our technology.
Cody Simms (32:40):
Super helpful. It sounds like an application, but not necessarily a primary focus, whereas lithium and other metal extraction sounds like is a primary business line for you today?
Prakash Govindan (32:51):
Yes. In an ideal world, if I had infinite bandwidth, I would go after seawater desal right away. As a company that is albeit growing at tremendously fast rates, I still don't have the bandwidth to go everywhere simultaneously. I'm picking and choosing the most impactful things we can do.
Cody Simms (33:12):
Another area that I saw you work on is a topic that frankly, I think probably doesn't get enough attention, which is this topic of PFAS or forever chemicals. These chemicals that you can explain them probably better than me, but that essentially cause permanent contamination challenges. Maybe explain a little bit about the problems that you deal with there.
Prakash Govindan (33:33):
Great point. Perfluoroalkyl substances, PFAS and PFOS, and related compounds, they're rightly called forever chemicals. They don't degrade with time, and they are put into the environment initially by the invention of 3M, the non-stick coatings, and even in nonstick pots and pans in your house have these. They go into the water, they go into the air.
Cody Simms (33:59):
This is like Teflon, is that what we're talking about here?
Prakash Govindan (34:02):
A whole bunch of associated compounds, not just Teflon, but Teflon is definitely one of them. Recently, it has been shown that PFAS and PFOS is extremely bad for human beings. In adults, it can cause heart disease, cancer, et cetera. In children, it can be fatal at high concentrations. Recent study was done in the US, the heartbreaking results, 50 wombs of mothers was tested, and something like 80% of them had PFOS in the womb.
(34:37):
In water, it's a big, big problem. It's not yet regulated by the EPA. They're still trying to figure out what is the light level of contamination that can be allowed.
Cody Simms (34:48):
I'm just thinking about it in my own life, I've had non-stick pans. That stuff is just clearly chipping off around the edges, which sounds horrible.
Prakash Govindan (34:56):
Yeah. It doesn't degrade, Cody, it just stays near you, then give it to the next generation, you give it to the next generation. Where that will end is the scary thought. There's a movie on this, I forgot what the movie is called, Deep Water, something like that. Nice movie. In any case, whereas the entire industry is trying to minimize the problem and then sweep it under the carpet, what Gradiant has achieved via its technology in PFAS is we are able to destroy the compound.
(35:25):
We'll concentrate it using, I have been saying, if more than a water treatment company, Gradiant should be known as a water concentration company. That's our expertise. That's where we have invested our R and D. That piece, we are really good at. We concentrate the PFAS up, and then we have technology now which we built from scratch in our lab to destroy it. Using an electrochemical technique, we can destroy the PFAS, which means the problem is eliminated.
(35:54):
The technology is not a commercial, it's still in pilot testing phase, but we hope to get it out there soon, because it's a solution that the world requires. It's not just PFAS, Cody. It's not just PFAS and PFOS or this forever chemical. There are emerging contaminants from every industry that is not being regulated today. You take pharmaceutical industry, there are long chain compounds that come out of production of, for example, birth control pills. Those are difficult to destroy. The typical water treatment plants don't catch them, and they get discharged into the sewer.
(36:29):
There was a case recently where we were contacted by the Chinese government, because a pharmaceutical company and its water treatment partner, a Singaporean company, I don't want to name them, they allowed discharge of a trace compound into the Yangtze River. This compound is not a regulator but has known health effects. This emerging contaminant area is very much something I'm also personally focused on from an R and D perspective, because it has a huge impact on the world.
(37:01):
We are constantly inventing new ways to make products. Industries are constantly changing solvents, and ingredients, and so on. The effects of some of that going into the wastewater is often not studied upfront. It behooves companies like Gradiant who are water treatment experts to sort of focus on this.
Cody Simms (37:24):
Looking at the list of customers that work with you on your website, it's some really big names. We've talked about semiconductors, it's folks like TSMC, it's folks like Micron. We've talked about pharma, it's folks like GSK and Pfizer. Talked about mining, it's folks like BHP, Rio Tinto. Food and bev, Coca-Cola, AB InBev. These are some of the world's largest branch chemicals, DuPont.
(37:48):
What does it look like when they work with you? You said they are paying you to solve this problem end to end. What's the actual operational setup, and what is the financial mechanism that they're using to work with Gradiant?
Prakash Govindan (38:03):
It varies. I'll give you the example of our semiconductor clients in the US. The CHIPS Act was passed, which is a great thing, honestly, for the US and for the industry. Within the CHIPS Act, they stipulated that those who are getting this funding, the semiconductor companies have to meet certain water sustainability standards, water recycling standards, including zero liquid discharge, perhaps for the first time in the US, that's been stipulated.
(38:33):
That is driving some of this. Operationally, how that looks is we are, typically, Gradiant is the end-to-end solution provider for water. They will come up with an RFQ, this is what we need, black box. They'll invite companies to bid. Gradiant gets involved at an early stage, because we can advise companies on what their problem is, which, in some cases, is difficult to put the finger on for non-water experts. Let's face it, semiconductor people are semiconductor experts, not water experts.
(39:07):
We get involved with RFQ, and then RFQ comes out. Then we come up with a design, and we bid. Once we get the order, we go in, and not only do we design, build, and deploy the end-to-end system, these are large scale water treatment plants that we build, we also tend to operate them for a period of time for customers. This is where our AI technology is so useful. We are one of the very few handful of companies which can not only supply the technology and the hardware for water treatment, but also the software and the AI optimization piece, which minimizes carbon footprint, which many ways, is energy consumption.
(39:50):
We operate the plants. Sometimes, Cody, we even find investors and we own the plants. It's built, owned, and operated. It varies from industry to industry. The GSK example that you said, they typically like to own their assets, so we sold the plant to them. They're excellent operators. We train their operators, they run the plant themselves. Industry to industry, country to country, we're flexible. We say, "We're here to solve your problem not to create new ones. We don't want to put any limits on how we will work with you."
Cody Simms (40:26):
These plants are typically co-located at the manufacturing facility, presumably. They're catching water, because you're not just treating the waste, and like you said, in most cases, you're actually recycling it back into their operations so that they're not having to continually source new water.
Prakash Govindan (40:41):
Every case, we are recycling almost. Almost every case, we take the wastewater and we give it back to them. We are typically within the chip foundry, within this pharmaceutical plant, within the food and beverage plant, we are in there. We have to comply to their safety standards. For someone with a PhD, and a scientific background, and an entrepreneurial event, this was a learning gap over a period of time, because you quoted our list of clients, from the Chevrons of the world to the Microns, the GlobalFoundries.
(41:13):
Because we work across such a diverse group of high-end clients, our safety mechanisms are cutting edge, and they apply. Then I have 500 page-long safety trainings that every one of our employees have to take, because we have to comply to semiconductor, and food and beverage, and pharma, everything else.
Cody Simms (41:35):
When you extract a valuable byproduct from waste, are these clients wanting to get into your ability to monetize said byproduct if that's not part of their current business line?
Prakash Govindan (41:50):
In some cases, yes. Textile is a great example. In order for dyeing operations to work, in order for this to be dyed the Gradiant purple color, I'm a little colorblind, I think it's purple, you have to put salt in the water along with the dye. This is typically glauber salt or calcium sulfate decahydrate. It costs 10 times that of common salt. What Gradiant is able to do is in India, it was a problem earlier that some of these dyeing operations was discharging the water into the sewer, or the [inaudible 00:42:25].
Cody Simms (42:25):
We've all seen horrible pictures. Yeah, for sure.
Prakash Govindan (42:28):
What Gradiant does is not only eliminate that disposal, and not only eliminate their sourcing problem. In a place, for example, in South India, there's a city called Tiruppur, which is a textile city. There are so many textile mills, dyeing mills there that they say the ground is filled with dye in that part of the world instead of soil. What Gradiant does is avoid, make sure that these mills don't have to take water from the local bodies, in addition to discharge.
(42:58):
Also, the third thing we do in those applications is what you mentioned earlier, we produce glauber salt of a quality that can be reused from the wastewater. Same is true, there are nickel mines we work for in Australia, for example, where we are able to increase the recovery of nickel from the incoming source of nickel. Typically, say, 60% of nickel is recovered, we are able to increase the recovery by another 20% because of our water treatment operations.
(43:30):
In the case of textile, they will let you share in revenues when you produce that, because others are not able to do that, and Gradiant is, they will share in revenues, whereas in the case of mining, it's more of a conversation.
Cody Simms (43:44):
That's their core business. Makes sense that they might already know how to monetize that byproduct.
Prakash Govindan (43:49):
Very interestingly, we had proposed at one point that we'll produce road salt, because in Texas and in the US in winter, you need road salt to avoid icing up the roads. We'll produce road salt from oil and gas wastewater produced water. We couldn't get the permit from the local authorities because they said anything coming out of the oil field is oil field waste. Even if you produce a clean product out of it, you cannot use it in. Typically, it has to be used within the industry, otherwise regulators have a problem with it.
Cody Simms (44:23):
You have recently, I guess now mid-2023, announced your series D round of funding. It was a $225 million round of funding. As you have mentioned, valued the business north of a billion dollars, congratulations, and something over $400 million raised to date into the company in general. I noticed most of your investors are large family offices, PE, et cetera.
(44:50):
It doesn't look like you went the route of traditional venture capital in the early stages. I'm curious if you can describe what the early days of funding Gradiant were like, and how that has changed as you've grown.
Prakash Govindan (45:06):
Anurag and I are, I would say, somewhat unlike a typical, perhaps you guys come up against Silicon Valley entrepreneurs, we are engineers. The ability of our venture capital fronts, especially back in the day when we were still raw out of MIT, to understand what we were trying to do and put a value on this water treatment company.
(45:30):
We talked to plenty of VCs, but we gravitated naturally towards high net worth individuals, and family offices, all with ties to MIT. That ecosystem around MIT is amazing. Honestly, Anurag is amazing at fundraising. If it was just me, we would've raised $0.
Cody Simms (45:49):
You have a serious business. I think I saw, I don't know how recent the stat was, but it was $200 million or so in revenue I think, give or take. I don't know what you're able to disclose. I saw that somewhere on a website or something.
Prakash Govindan (46:01):
More than 200 million in revenue this year, and 500 million in backlog. We have half a billion dollars in projects already signed, so we will easily do north of 350 million the coming year. Sky is the limit. Honestly, we believe we'll break the billion dollars in revenue mark over the next three years. Already, even though we've only raised Series D early last year, it's been only a year since we raised Series D. If we go out and raise money at any point now, we'll get valued at multiple billion, not just one, because of this success.
Cody Simms (46:40):
There are not a lot of companies like yours, but I'm going to ask this anyway. A lot of companies like yours, heavy infrastructure companies, over the last few years went public via the SPAC route. You obviously chose to not do that. I'm curious how you all contemplated that pathway while it was open. It's not necessarily open anymore, but while it was open, and the decision to not go that route.
Prakash Govindan (47:04):
The option to become a public company is there, and it was there through the SPAC route. There were so many SPACs that approached us. We had some serious discussions with a couple of them, but we felt it was never for Gradiant. Keeping it private, we have access to a lot of capital. Our current investors, even if we don't add a single new investor, our current investors have very, very deep pockets. We don't need to go elsewhere.
(47:30):
Keeping it private, while Anurag and I never aspired for large build, and never continue to be the same way, for us running the company, and making sure it has impact, there's an effect. You can see, in many startups, when the founders and the entrepreneurs leave, the nature of the company changes. It becomes more just P&L, and less about the impact on society, and so on. We don't want that to happen. Actually, when it goes public, I think Anurag and I become the SPACs in the company.
(48:00):
One of the reasons we didn't take the SPAC route, you saw how the SPAC thing is turning out. A lot of those companies which listed at insane valuations, insane valuations are now trading a 10th of price or something. That's another thing which would have limited the impact of Gradiant around the world. We couldn't digest that a SPAC offered us $7-8 billion in value. That was two years, three years ago when we were less than 100 million in sales. It just doesn't make sense. You see the pattern, right? No VCs, no SPACs. We are normal people.
Cody Simms (48:38):
I have one other question for you. We talked about it before the show, though I didn't get the answer, which is the name of the company. Every time I type Gradiant, spell check tries to add an E instead of an A. You said there was a story there that I want to hear the answer to.
Prakash Govindan (48:51):
I think this answer will reveal that I'm a total nerd. I was obsessed during my PhD, and I continue to be so, about driving forces, what drives people, what drives nature sources. Fundamental driving forces behind water treatment, especially desalination, is at the local level in membranes, at the local level, in cooperative tubes and whatnot. It is gradients of concentration and gradients of temperature. Mathematically, a gradient of concentration is written as delta N and mathematically, a gradient of temperature is written as delta T.
(49:31):
A cross-gradient of concentration and temperature is where Gradiant as a company thrives. That's what we have broken in terms of the signs. That is delta NT, so it's actually not an A, it's G-R-A-D-I, delta N-T. Then Anurag and others told me, "You can't put a delta in the name, just make it A," so it became Gradiant with the A.
Cody Simms (49:56):
That's amazing. Prakash, I so appreciate your time with us today. Is there anything else I should have asked, or anything else that you want to make sure we know about? Also, if there are areas where you need help or support from any of our listeners in any way who are inspired by your story today, certainly feel free to share that as well.
Prakash Govindan (50:16):
Absolutely. First of all, thank you. Very, very insightful questions. You have done so much research. I often do these interviews, not so much podcasts, but to have an interviewer so researched and informed is a pleasure. There is nothing that we use, no products that we come in touch with, which is not impacted by water.
(50:39):
To your listeners, whether they are in the carbon capture industry, or power sector, whatever they might be in, if there is a water problem we can help with, reach out to Gradiant with the A. We'd happy to be of service. Thank you for your time, Cody, and thank you for this insightful questions and interview.
Cody Simms (51:00):
Prakash, thank you so much. I've really enjoyed it.
Jason Jacobs (51:02):
Thanks again for joining us on My Climate Journey podcast.
Cody Simms (51:06):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
Jason Jacobs (51:16):
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Yin Lu (51:29):
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Cody Simms (51:38):
Thanks, and see you next episode.
