In the third of a six-part series on innovative start-ups, Lee Yen Nee talks to environmental engineering firm SIF Technologies to find out how it took a concept from lab to market with a little help from Spring Singapore's Start-up Enterprise Development Scheme (Seeds).
ENVIRONMENTAL concerns had long been high on entrepreneur Matthew Tan's list of priorities, but his efforts to market a chemical-free water treatment system six years ago was met with an icy response from sceptics.
The green movement here was still in its infancy and with chemical use dominating the water treatment industry, many were not easily convinced by Mr Tan's innovation.
"When you go out there, there is a 95 per cent chance that people are using chemicals to treat water," he said.
"Nobody believed us. People kept asking why they would need to recycle, why they would need to install this system to reduce chemical waste."
But he was unfazed - and so confident in his system he offered a money-back guarantee to anyone who installed it.
"The strategy worked. No one returned a system," said Mr Tan, 45, who at the time was running a one-man show at SIF Technologies, the company founded by his scientist friend, Dr Paul Seneviratne.
Dr Seneviratne, 47, had developed the water treatment system called DPA, named after the dispersion algorithm.
It uses a form of technology called hydrocavitation to increase dissolved oxygen in water by breaking down its molecular clustering. When water is oxygenated, the nutrifying bacteria, or good bacteria, can break down waste in the water, allowing it to be treated and reused.
DPA is "green" as it treats water without using chemicals and does not require electricity to function. Industry sectors such as agriculture, oil and gas, pharmaceuticals as well as hospitality have embraced this system.
For a couple of years, Dr Seneviratne had tried to market the innovation but he lacked a proper business structure and found it difficult to break into the market.
He then approached Mr Tan, a 17-year veteran of sales and marketing, to join the company. Mr Tan wasted no time in putting together a business plan and applied for funds from Spring Singapore's Start-up Enterprise Development Scheme (Seeds).
At the end of 2004, which was about one year after Mr Tan joined the company, they received good news when Seeds approved a $300,000 funding that proved crucial as it helped SIF Technologies to get going.
"It gave us the kick-start," said Mr Tan, now chief executive of SIF. His next step was to patent Dr Seneviratne's innovation and bring in two full-time engineers. The firm now employs six people. Dr Seneviratne is the chairman of SIF.
Things started to turn around after the Seeds funding, but Mr Tan knew that a common hurdle new innovations face is the lack of evidence to support what might appear to be extravagant claims.
He set about documenting laboratory reports and trial results from pilot studies and sought third-party scientists to verify the findings. The process helped SIF differentiate itself from its competitors, said Mr Tan, who hopes to license and franchise the technology worldwide.
He also kept testimonials from satisfied customers. This sort of feedback is helpful not only in keeping track of progress but in identifying new business ventures as well. That new venture turned out to be aquaculture, which had not figured in Mr Tan's initial business plan.
One of his customers, who runs a fish farm, noted that fish bred in water treated by DPA grew faster and produced better-quality meat than those raised in untreated water.
Mr Tan believes aquaculture has huge potential for growth, particularly as food stocks in the oceans are being depleted, so "land-based farming is going to be the biggest thing".
The DPA system, which costs about $15,000, enables farms to be self-sustainable by recycling water, so farmers need not worry about scarcity and wastage.
Besides commercial clients, SIF attracts individuals who install the DPA system for personal use. Mr Tan cited one who used the system for his koi pond and after six weeks found that the bacteria count had reduced significantly.
Over the last few years, DPA has recycled an estimated 500 million litres of water. That translates into a cost saving of several hundred thousand dollars in water bills.
The company's track record has helped to bring in several investors, including angel investor Francis Chua, who was attracted by the various areas in which the system can be applied.
SIF recently signed several major contracts here, including one to supply DPA in Singapore's first eco-precinct, Treelodge@Punggol.
Mr Tan has highlighted the possibility that SIF could be acquired by a listed environmental engineering company, perhaps within nine to 12 months. He believes this would enable the firm to take "quantum leaps" and "play the big boys' game".
Seeds of innovation
UNDER the Spring Singapore Start-up Enterprise Development Scheme (Spring Seeds), Spring Seeds Capital – a wholly owned subsidiary of Spring – co-invests with third-party investors up to $1 million in local start-ups.
To qualify for the scheme, these firms need innovative products and processes possessing intellectual content and strong international growth potential.
To be considered for investment, a firm must:
- Be located in Singapore;
- Have been in operation for less than five years;
- Have a paid-up capital of $50,000 to $1 million; and
- Have an independent third party committed to invest at least $75,000 in the business.
The scheme covers growth sectors such as information communications technology, science and technology, and business services.
More information is available at www.spring.gov.sg/seeds
For more information, visit http://www.spring.gov.sg