The journey from Idea to IPO is a tough one. In this five-part series, we look at how the founders scaled their startups and reached new milestones.
It started with pigs. Or, more accurately, the “manure lagoon” he built on an Alberta hog farm. Looking for help with this football field-sized problem, local farmers reached out to Karen Schuette, who ran a water treatment business focused on groundwater, which treats hydrocarbons—organic chemicals found in oil, natural gas and coal had become contaminated.
It wasn’t the first time someone had approached him with a longshot ask; Schuette regularly worked on water purification projects at gas stations, airports and rail yards around the world. However, this was the first time that a cold inquiry caused a pivot in the business itself.
“It seems like a simple step from diesel and hydrocarbon contamination to compost waste,” says Schuette. “But we quickly learned it wasn’t—there was nothing on the market to help compost waste.”
Within months, he and his partners started a new company, livestock water recycling (LWR), and were on a path to continued, global growth—but it would take a decade of hard work to get there. “There are a lot of barriers when it comes to growing a business in Canada,” says Schuette.
making a business case
Water treatment is all about filtration. The goal is to separate the organic particles from the clean water – often using chemicals that cause these impurities to either float or sink – where they can be removed. Here’s where it gets complicated: Different types of waste require very different chemical treatments and physical processes to deal with, and there was no protocol for dealing with compost. (The high nutrient load in the compost made it particularly complex to deal with.) The LWR team began experimenting with their existing equipment and techniques. As soon as she saw some success, Schuette knew she had a strong business case for creating a more effective approach and set out to learn all she could about composting.
It’s the skill that most impressed Michael Madsen, an executive in residence Mars planet, an innovation center in Toronto. As one of Schuette’s advisors mars momentumA program that supports high-potential ventures is working to help increase LWR globally.
“To grow a company, you need to articulate the customer’s problem, and then present yourself as a subject matter expert who can solve it,” says Madsen. “Karen is great at that. She is extremely focused and creative, and she has an intellectual curiosity about the problems facing beef and pork producers. She really, really understands their business.
Finding the Value Proposition
Establishing the business case was the easy part. Developing the technology was also not that difficult. Learning the ins and outs of an unfamiliar industry and convincing farmers to try something new, though? It was a huge challenge.
“It is difficult to bring a new way of doing things to a very old, well-established market. Some farming families have been on their land for 100 years – they know what they’re doing,” says Schuette. “It wasn’t an inefficient system we were trying to fix; they were very efficient about it And were as economical as possible.
Through interactions with hundreds of farmers, he realized that the company’s value proposition was not just about cleaning up manure. It was in their ability to create new sources of income for their clients. As every backyard gardener knows, compost is an excellent fertilizer. Once the LWR filters the waste from the lagoon, farmers can sell the processed manure as two separate fertilizer products. Some of the company’s customers are also selling their compost as feedstock for biogas, an alternative energy source produced by fermenting organic matter. Farmers also reported minor benefits, such as healthier herds, increased pregnancy rates, and reduced antibiotic use.
LWR also helps farms become more environmentally sustainable. according to a Study In global change biology, “Animal manure management is responsible for about 10 percent of greenhouse gas emissions from agriculture globally,” most of them from manure lagoons. Schuett says LWR’s technology can reduce these emissions by 50 to 82 percent. What’s more, only 4 percent of the world’s water supply is currently reused. LWR is aiming to recycle one trillion gallons of manure into reusable water and bio-fertilizers by 2030.
looking at scale
Businesses like water treatment take a while to get off the ground in capital-heavy markets. Even with all its benefits—and the global expansion of livestock farming in response to growing demand for meat—it took several years for LWR to see real traction. Then, just before the pandemic, a variety of market forces combined to supercharge the company’s growth. Almost every country in the world is becoming interested in renewable fuel sources; The US, in particular, began to pursue biogas. Fertilizer prices also increased, making the prospect of selling their manure even more attractive to farmers.
It was around this time that Schuette decided to seek help from MARS and its Momentum program. At first, Schuette’s focus was simply on gaining access to new networks and establishing itself as a player in the cleantech industry.
“There’s a real problem with access to capital and access to the market in Canada,” she says. “We wanted to grow vocally, which meant raising capital, but we didn’t have the network of investors.”
Momentum connects Schuette with experienced entrepreneurs who are experts in everything from marketing to funding to human resources. This curated team provides them with a warm introduction to their network and solid advice on how to scale the company internationally.
“Having a resource where people can tell you what works for them makes you feel supported and much less alone on your journey,” says Schuette. “You are not wandering around looking into an opaque future, but are actually carving a clear path forward.”
With increased global demand, the company has tripled its revenue and nearly doubled its workforce. Schuette says Momentum’s help has been invaluable as LWR looks to its next phase, which focuses on Europe, the Middle East and Asia. Their advisors are helping them prepare for their $20 million equity round, which will be used to develop these new markets and launch new products. The company estimates that this will allow it to double revenue every year for the next three years and achieve 30 percent market penetration.
LWR has started to build a revenue model that could transform the dairy industry. There are also predictions that manure may be more valuable to farmers than milk. “This new profit dynamic has the potential to make the industry more economically and environmentally sound,” says Schuette. It’s an unexpected turn, but Schuette is finding a way to turn manure into gold.
The MaRS Momentum Program works with high-growth Canadian companies to accelerate their path to $100 million in revenue. Is Your Business Canada’s Next Anchor Company? Find out more and apply to join Program,
