Cerahelix Tackles Water Conservation By Helping Industries Recycle It

Cerahelix is the second of five companies to be announced as a 2019 Startup to Watch. Maine Startups Insider is announcing one company per week throughout the month of September. For more on how the companies were selected for the list, please visit this page.

There were two large, established European companies standing between Susan MacKay and her startup’s first six-figure contract — a win that would help accelerate the founder and CEO’s mission of conserving water in a world that needs the resource more than ever before.

It was earlier this year, and Cerahelix, MacKay’s eight-year-old company based in Orono, was vying for a contract with a Fortune 50 company based in the United States that needed filtration technology to process 100,000 gallons of wastewater a day at a new manufacturing facility it’s building.

The two Euopean companies bidding for the same contract were incumbents in the ceramic filtration space. But that didn’t matter to the Fortune 50 company, which MacKay was not at liberty to name.

In Cerahelix, the large manufacturing company saw something more promising. And so in March, it awarded the contract to the Maine startup, serving as a significant validation point for MacKay’s nanofiltration technology, which can recover water from wastewater at a higher rate than traditional products thanks to microscopic holes in its membrane created through the use of DNA. These nanofiltration devices can remove impurities from water that are 100 times smaller than a virus, according to the company.

“For us, it was huge,” says MacKay, who has a Ph.D. in chemistry and conducted postdoctoral research at the University of Maine. “They knew that they couldn’t solve the problem with the current technology out there.”

The major customer win is an important step toward commercialization for Cerahelix’s technology, according to John Chahbandour, a member of Cerahelix’s board of directors. But, he adds, it wasn’t a complete surprise “given how superior their product is to what’s available on the market.”

“Their ceramic filters are able to operate and treat all of those types of wastewater at a very high degree of efficiency and at a much lower cost than traditional membranes,” says Chahbandour, who invested in Cerahelix through his Denver-based firm, Hydro Venture Partners.

Cerahelix Enters Growth Mode

After years of developing Cerahelix’s nanofiltration technology and testing out different markets, MacKay says the company is now in growth mode, which comes with all the opportunities and challenges that many startups experience at this stage. The company projects it will end 2019 with several million in revenue, after a negligible amount of sales in 2018. Earlier this year, MacKay said there was $20 million in potential orders in her business development pipeline through 2021. This week, she reports that number has already grown to $64 million.

“My job has gotten in many ways easier, because I have a really strong management team, and there’s all the ‘I’m not doing everything anymore,’” MacKay says. “But now we’re struggling with, ‘okay, we have to be communicating,’ and communication becomes even more critical when everyone’s doing so many different things.”

In the past 12 months, Cerahelix more than doubled its headcount to 18 employees, established a manufacturing operation at the Bangor Innovation Center, hired a head of sales and started commercial production of its larger format filtration product that will get installed at one of the Fortune 50 company’s manufacturing facilities later this year.

That growth was aided by a $2 million Series B funding round the startup raised early last year. In total, the company has raised $3.9 million in equity funding over the course of three rounds, as well an additional $2.5 million in non-dilutive grants, according to MacKay.

But even as Cerahelix begins to take in real revenue, she is already in the process of raising more money from investors.

“We still need investor money, even though we’re making revenues, because we’re still growing,” she says. “You’re competing for dollars with everyone else out there raising money.”

Helping Companies Use Less Water, Create New Revenue Streams

Cerahelix started pursuing the wastewater reuse market about two years ago when the startup ran a pilot at Magic Hat Brewing Company in Vermont.

Working from the brewery for a summer, MacKay realized the company should focus on commercializing a larger format of its ceramic filters — the kind that are now set to be installed later this year in the Fortune 50 customer’s manufacturing facility.

The value proposition goes like this: With Cerahelix’s nanofiltration technology, the startup can help industrial companies recover more water they process, lowering their reliance on local water resources while also reducing wastewater transportation costs.

“If you can get the intensive water users to recycle 95 percent of the water that they’re utilizing, that can have a tremendous impact on water that’s available for other users,” Chanbanhour, the Cerahelix board member, says.

But it can go further: MacKay says the remaining waste processed through Cerahelix’s filters are highly concentrated and can be used, for example, as an effective fertilizer, creating a new potential revenue stream for wastewater producers.

Now with her first major customer, MacKay says the startup has an opportunity to expand to nine other sites owned by the Fortune 50 company. Another well-known consumer packaged goods company is also reviewing the company’s technology, as is NASA, MacKay says. But Cerahelix is also working on diversifying its customer base, in part by pursuing new sales models, like selling through partners who could lease out the filtration equipment to end users who may not want to invest upfront in the technology but pay for it as an ongoing operating expense.

After so many years of work to more than anything, MacKay says, is having a team that is aligned on a mission.

“For me, knowing from the start that we are going to be applying technology in some way to work on the water crisis, really making an impact in helping conserve and preserve water resources, that’s really the core value that I would say a hundred percent of the current employees at Cerahelix all share,” says MacKay.