BC Business
CarboNet has quickly built an international customer base for its cost-effective water treatment technology.
Like many other local business owners, the founders of cleantech firm CarboNet had some sleepless nights when the COVID-19 pandemic struck.
The Vancouver-based startup had just spent a year proving the effectiveness of its water treatment platform, which uses drug delivery technology to target, control and remove contaminants. After landing customers in the U.S. oil and gas industry, CarboNet issued its first invoice in March 2020.
“Not the best timing, to say the least,” Amielle Lake, co-founder and chief commercial officer, recalls with a laugh. “First there was the pandemic, which was a total shutdown, and then the geopolitical battles around oil prices. We lost 85 percent of our market overnight.”
But that didn’t deter CarboNet, whose three other founders are CTO Mike Carlson, COO William Schonbrun and CEO Barry Yates. “We took a step back, and we realized we had something pretty meaningful,” Lake says of the company’s chemical products, a lower-cost and less wasteful alternative to the standard flocculants and coagulants used in water treatment. So the team doubled down on its NanoNet offering, developed by Carlson during his PhD studies in biochemistry at UBC.
As oil and gas rebounded in the second half of 2020, CarboNet built a solid business helping producers to treat water previously used for hydraulic fracturing, or fracking. “Within 12 to 18 months, we grabbed 65 percent of the market in the Permian [Basin],” Lake says, referring to the large oilfield in the southwestern U.S.
CarboNet is tackling an urgent problem, she maintains. “When we treat water, it gets recycled,” Lake says. “And so the result of that is, fresh water is not used. I think the world is going to recycled water in industrial processes, but also potable one day.”
Although we might never run out of water, the fresh variety keeps getting scarcer. “Our goal is to accelerate the world’s transition to recycled water,” Lake says of CarboNet. “In agriculture, in oil and gas, in mining, in food and beverage, water is an increasingly serious issue. And we believe we can play a pretty meaningful role with our very effective, low-cost, safe chemicals.”
Even with the pandemic, things have moved quickly for CarboNet, which launched in 2019. Lake, who previously founded and sold marketing software provider Tagga Media, met Carlson and Yates at UBC, where she was entrepreneur-in-residence and Yates was managing director of entrepreneurship@UBC. The three left the university to commercialize CarboNet’s technology with Schonbrun, a former colleague of Yates’ from digital agency Blast Radius.
As Lake points out, water often contains tiny metal particles, microplastics and other contaminants. “The way they deal with that in the water treatment industry is, they use chemicals and machines to effectively turn those nano-sized particles into some type of solid that can either be sunk and removed or floated and removed, and then filtered.”
As a biochemist, Carlson thought there had to be a better way. So he decided to apply methods from drug delivery, creating polymers that home in on contaminants with a new level of precision and transform them into a solid that’s easy to remove.
“We’re using a lot of the same basic principles and concepts and classes of polymers that are starting to be used for the development of drugs, on the screening side and on the formulation side,” Carlson says, noting that Vancouver is a hub for such work. “It’s not the same technology, but it’s the same principles as a lot of the RNA vaccines. Those nanoparticle formation technologies, a lot of them came out of Vancouver.”
Compared to traditional water treatment methods, CarboNet’s approach is highly specific, Carlson explains. “We have a core technology around making these particles that go and target things,” he says. “We’re all about being precise in water, and typically, water treatment has not been precise. You try to treat everything at once, and you’ll add systems to go after all these different things in the end.”
With a product in hand, the CarboNet team got equally specific about finding customers.
“One of the things we’ve all learned from our entrepreneurial background is, you have to maniacally focus if you want to get anything done,” Lake says. “We had contacts in the oil and gas space, and we knew that this chemical could address lifting oil and metals out of water. So we decided to maniacally focus on the Permian Basin, where it’s arid, water is an issue, oil production is substantial—and water that is generated in this production is substantial and a big cost centre for these operators.”
That focus, which saw CarboNet prove its technology live in the field, has paid off. In 2021, its first full commercial year, the company shipped seven million litres of chemical and treated the equivalent of 35,000 Olympic-size swimming pools full of water. CarboNet expects to triple or even quadruple its revenue in 2022, Lake says.
So far, the company has raised almost $26 million in equity and other financing, including a recent $7.6-million debt round from West Vancouverbased Monashee Capital Corp.
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Besides oil and gas clients, CarboNet has customers in mining, agriculture and industrial wastewater treatment. What’s next?
For starters, the company is developing a NanoNet that targets boron, a toxic chemical required for water treatment. “It’s a major issue in groundwater and seawater desalination,” Carlson says. CarboNet then plans to pinpoint other substances found in water, whether it’s high-value metals such as lithium or “new, emerging contaminants.”
To make that happen, the business keeps growing. CarboNet already has about 40 employees, two thirds of them at its East Vancouver lab and Delta manufacturing facility. The rest of the team is in Big Spring, Texas, home to a distribution and warehouse space. CarboNet, which will hire more scientists and other staff this year, plans to grow its locally based research group from 14 to 20 by the end of 2022.
“Scientists love moving to Vancouver,” Carlson says, noting that his firm is also setting up production hubs elsewhere in North America. “Our goal is to be an extremely well positioned and large water treatment company that’s based in Vancouver and providing scientists a novel place to make positive environmental change.”