One of my strongest memories from the early days of the membrane industry occurred at the Membrane Technology Conference in Boston in 1988. This annual conference was the ‘must attend’ for the membrane business community, featuring technology presentations combined with commercial developments including the latest M&A activity. The inventor of the Thin Film Composite RO membrane, John Cadotte had star billing at the conference. As he strode forward to provide the keynote address, the room rose as one to provide a standing ovation. His company, Filmtec, had been bought a couple of years earlier for $75m having achieved the heady heights of $1.2m in sales. This outrageous purchase price gave all membrane entrepreneurs hope! Such valuations became de rigeur in the tech boom of the late 1990s, but in the mid 1980s, it was a rare event indeed, especially for a membrane company. Membranes had not yet got going.
Scroll forward 35 years and Erik Roesink’s NX Filtration has topped this achievement by an order of magnitude. Erik has a stellar track record as one of the key architects of the introduction of UF to the drinking water industry with the Dutch start-up Xflow. UF has become a standard barrier technology for the removal of viruses and cryptosporidium That development started in the mid/late 1980s and 10 years later we witnessed the birth of a whole new industry sector as municipal water suppliers adopted UF, admittedly with the encouragement of the regulators.
Now Erik has turned his focus to smaller contaminants, particularly man-made organics. These so-called ‘Forever Chemicals’ include PFAS as well as agricultural and medical residuals. His start-up, NX Filtration, has revenues similar to Filmtec at the time of the Dow acquisition. Astonishingly, the company has achieved a valuation of €550m, an eye-watering sum. The Dow acquisition was driven by a general belief that desalination would become essential for water starved regions and develop as an important option for dry countries. The motivation behind the NXF investment is more nuanced and potentially much more widespread.
NF has up to now been the junior partner in the RO/NF space. When introduced commercially 30 years ago, it achieved limited use for some specific applications, but failed to keep pace with the rapidly expanding demand for RO. Indeed, rather unfortunately, it became known in the early 1990s that RO suppliers would dub their RO integrity failures as NF!
How times change! NF now looks to be turning the tables on RO since it is better equipped to deal with a modern problem caused by our increasing contamination of the environment. Of course, there will always be applications for RO for desalination; the removal of all of the dissolved inorganics will sometimes be the only solution. But NF offers an environmentally superior solution to the problem of micro-pollutants and man-made organics that make their way into our water sources. NF provides high removals of these problematic components without removing the salts, or at least removing much less of them than RO. For general treatment of surface water sources, this makes perfect sense, since removing salts is both expensive in terms of energy and unnecessary in terms of water quality.
Perhaps NF will provide a general barrier to organics that are becoming ever more prevalent in surface water, or NF could also be used to treat one of sources of the problem at the wastewater treatment works. Either way, Erik is probably on to a good thing. At the very least we can offer a virtual standing ovation to one of the leading lights of the membrane world! And maybe this story provides hope that new developments in membranes can still provide a tremendous and unexpected opportunity for investors as well as benefits for society.