Crowdfunding with AlvaTech

ALVÁTECH is a ground-breaking tech and social business that has developed an affordable solar-powered water treatment technology that effectively mitigates water and soil salinization. The treatment involves changing the molecule behavior of water as a result of which, high-salinity water can be efficiently absorbed by crops. Towards the end of the year 2022, the UK-based company, which is expanding into multiple countries in the MENA region, ran its second successful crowdfunding campaign. To help others learn from his experience, CEO Zac Gazit sat down with our MENA RIH Communication & Knowledge Management Key Expert, Hannah Wuzel. They talked about his key learnings and impressions, as well as some previews on what’s to come for his company.

Q: What made you decide to launch a crowdfunding campaign with Alvatech?

Zac: The logic behind it is multilayered. We’re a green, eco-friendly company, we’re sustainable, and we deliver an impact. A crowdfunding platform with tens of thousands of people on it is a great way to spread our message.

There are a couple pieces to the crowdfunding journey. You first must go through a thorough due diligence process – [i]f you claimed that you are selling in [a] country [then] you must have proof, and if you said that you work with a distributor, they want to see the distributor agreement. Later, when investors come in, you will have an open conversation. Some investors are small, but through the platform we did manage to get to some large ones as well – and their value goes beyond the money as they can connect you and open doors. The third thing is that the journey matures the company. When you present to thousands of potential investors, you’re going to receive a lot of questions and suggestions – sometimes you don’t think about everything, and this offers up ideas.

At the same time, you’re running the company, you’re selling around the world, you’re developing new technologies, and, on top of everything, there’s a layer of people asking questions all the time. If you can manage all that, you feel very confident. This was the second crowdfunding campaign Alvatech has done and I can see the difference between the rounds. We thought of possible questions and prepared the corresponding materials in advance.

At the end of the day, this is the difference between crowdfunding and the Olympics: When the Olympics are over, you’ve got all those stadiums and infrastructure left, and nothing to do with them. With crowdfunding it is the opposite. You’ve got so much material that you can now use for sales and marketing. So, if you are ready for hard work, there’s a lot of benefits to taking this route.

Q: How do you aim to utilize the funds you raised in this round?

Zac: As we work globally, this year we want to provide more support to distributors in key countries. Compared to last year, our sales grew four times and we hope that we’re going to continue the same trajectory. This means we need to upgrade our operations to be able to support. Some funds will go towards this and product development.

That’s the essence of every company, to keep developing. This year, we will step into artificial intelligence and start analyzing the massive quantities of data that we have been collecting. And finally, we will focus on supporting our end-users, because the foundation of everything is the ability of the growers and farmers to purchase or to lease the technology/products that we develop. We want to make their lives and the distributors’ lives as easy as possible. We work very closely with WE4F on optimizing this approach and it’s going to be a big part of what we are going to do this year.

Q: You’re opening a crowdfunding campaign up to thousands of investors, which is different from managing relationships with just a handful of major investors. How does this work?

Zac:  This is one of the big advantages of crowdfunding. The platform is your intermediary, who represents and oversees all the legalities on behalf of all investors. Although we tried a different platform for this campaign, we had return[ing] investors that invested in the previous round already, which was very nice to see. They were pleased with the progress we’ve made since the last round. Crowdfunding can be considered a facilitator. Busy people often don’t have the time to go and look for companies. This is where the value of a crowdfunding platform comes in, as the good ones provide investors with a service by looking for interesting companies and then screening them. Secondly, they do due diligence on their behalf, which an individual may never have the ability to do. This allows serious investors to invest in many companies quickly.

Q: What are some major lessons that you took away from this journey?

Zac: I had other CEOs of startup companies approach me and ask whether it was worth it. And I tell them that, first, you need to know what you’re getting into. We had a dedicated team member on the campaign and an advisor to help, but the entire team must chip in. It is a commitment on a company level, and sometimes you need to ask yourself, is it worth the effort or should I just focus on raising money from angel investors or venture capitalists?

If you ever thought that crowdfunding is simple – no, it’s not. I already mentioned the due diligence, but there’s a lot of materials that you need to prepare. This round we got a couple of our investors to join and appear in the video to explain why they invested in Alvatech and why they think it is a promising investment.

Usually, for a successful crowdfunding campaign, you cannot start at zero. Investors don’t like to invest in a company that nobody has invested in yet. So, if you have a startup, you should do a private round to raise money, and then with that money you can start crowdfunding.

Most importantly, you need to be ready to expose yourself. Not just with the information and material you need to provide, but you will face a lot of questions on how you approach things, how you deal with pressure. And that’s an indication on      how you run the company. Some of the people are very demanding so you need      to answer fast and you sometimes need to deal with difficult questions, questions that you never expect anyone would ask. And you have to answer, even if you may not see the relevance. So, it is worth it, but you need to allocate time, energy, and patience.

Q: Was there anything that surprised you?

Zac: In the first round, we tried to be creative, we planted trees, gave away T-shirts and subsidized devices. But after having received lots of feedback, we realized that what people really want us to do is make an impact that they want to support, and they want us to focus on delivering that impact. That was an eye-opener for us, because we initially tried to learn from different sources. For example, when you look at Kickstarter, everybody is offering something. We wanted to offer something as well, but we realized that impact is people’s desired return on investment. And since we’re doing tree planting initiatives, subsidizing devices, and helping distressed communities anyway, as it is part of our company’s ethos, it makes sense just to focus on the core work that we do.

Q: Are you raising money from any other investors?

Zac: We have always been raising money from individuals, but this year we started moving towards institutional investors. This is demanding, but rewarding as it aligns with our vision. You need to meet strict goals in terms of sustainability, impact, food security, water saving, dealing with the impacts of climate change, and even aspects like climate migration. Additionally, we contribute to gender equality and women empowerment, because the majority of mers in Africa, for example, are women. We want to take advantage of the fact that a lot of the institutional investors are looking for companies like ours with a proven impact because they want to diversify their portfolio and add green companies. We are getting started on this journey of being ready to present to such investors. Moving forward, Alvatech will strive for a combination of different financing sources.

Q: What are you most looking forward to in 2023? What will the year bring for Alvatech?

Zac: This year is the year that we are implementing all the lessons learned. And there’s a very exciting journey around the R&D of the products. This year will require a lot of discipline but holds a lot of potential because when you create a company, this is the stage that you want to get to.

The global situation is concerning, but not necessarily a deterrent for us. On the one hand, you’ve got the increase in oil prices and shipping costs and fertilizer costs, alongside all the global tensions in politics, inflation, recession. And, on the other hand, with climate change comes water scarcity.

Farmers need water to grow food. That means the demand for our device and the target market is growing all the time. There’s less water for irrigation and less fertile soil  for growing food. All the turmoil in the financial sector doesn’t change the fact that farmers want to grow more with less. They want to spend less on water and less on fertilizers and make more money for what they grow. At the national level,      governments want to make sure that the agriculture sector has enough water and can be more efficient. Alvatech can play our part in providing solutions for these challenges.