The World’s Best Water Entrepreneur Actually Runs a Charity

When we think of world-changing entrepreneurs, names like Elon Musk, Jeff Bezos, or Bill Gates often come to mind. But there’s another one that deserves a spot on that list: Gary White. Along with his co-founder, the Hollywood superstar Matt Damon, Gary is transforming lives by addressing one of the most pressing global issues – access to clean water and sanitation.

Surprisingly, the engine driving this transformation is not an international governmental organization but a remarkably effective charity. Let’s explore the inspiring story of how Gary White’s innovative approach is reshaping the water crisis landscape:

with 🎙️ Gary White – Co-Founder & CEO of Water.org & Water Equity

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Resources:

🔗 Water.org’s website

🔗 Water Equity’s website

🔗 The World Bank’s “Funding a Water Secure Future“

🔗 The UN SDG 6 Data Portal

🔗 The Do’s and Don’ts of Rural Water Supply

🔗 Tom Ferguson‘s appearance on the podcast

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Full Video:

https://youtu.be/6HT94JY5uHI

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Water.org’s origin story

Gary White and Matt Damon founded Water.org with a bold vision: to ensure everyone in the world has access to safe water and sanitation.

Over the past 20 years, their organization has provided access to these basic necessities for one person every 10 seconds, resulting in over 66 million people benefiting from their efforts.

But what sets Water.org apart is its unique approach: instead of giving away water and sanitation solutions, they offer microloans.

The Power of WaterCredit

The concept of WaterCredit, pioneered by Gary White, involves providing small loans to individuals in need of water and sanitation facilities. These loans average around $377, with 90% of them going to women. Despite serving some of the poorest communities on the planet, these borrowers have a repayment rate of 98%. This impressive rate underscores the tremendous value these individuals place on having access to safe drinking water and sanitation, and their determination to repay the loans.

Leveraging Philanthropy

Gary White’s innovative model transforms every dollar of philanthropy into a sustainable, self-replenishing resource.

Traditionally, philanthropic dollars for water and sanitation projects were a one-time expenditure. However, by using these funds to provide microloans, Water.org has created a cycle where the same dollar can be reused multiple times.

This multiplier effect is a game-changer, enabling Water.org to expand its impact exponentially.

The “Financial Plumbing” of Water Solutions

White describes the need to create the “financial plumbing” necessary to connect those in need of water with the capital markets. This involves building a financial network that identifies viable projects, invests in them, and ensures they are sustainable.

The capital markets, theoretically infinite, find value in these projects because they create immense social and economic benefits.

Water.org is a Water Entrepreneur’s Journey

Despite the success, Gary White’s journey has not been without challenges.

The inertia and calcification of the traditional financial systems pose significant hurdles. Yet, his engineering background has equipped him with a problem-solving mindset, enabling him to navigate these complexities.

A New Approach: Water Equity and Resilience

The next evolution of Water.org’s mission is Water Equity, a fund that focuses on investing in water and climate-resilient infrastructure. This initiative aims to bridge the gap between the bottom-up demand created by microloans and the top-down need for substantial infrastructure investments.

By doing so, Water.org can address the broader systemic issues that hinder access to water and sanitation.

Measuring Success: Numbers that Speak Volumes

The impact of Water.org’s work is evident in the numbers.

With $5.5 billion in loans disbursed and 66 million people served, the organization has proven that access to water can be a profitable venture. The average cost of bringing water to one person through Water.org’s model is approximately $83.

This cost is significantly lower than traditional methods, demonstrating the efficiency and scalability of their approach.

The Broader Picture: Global Implications

If scaled globally, Water.org’s model could drastically reduce the cost of achieving universal access to water and sanitation.

The World Bank estimates that an additional $140 billion per year is needed to meet global water goals by 2030. However, if implemented at scale, Water.org’s approach could reduce this requirement by a factor of ten, making it a more feasible and sustainable solution.

The Human Element: Stories of Change

Beyond the numbers, the true impact of Water.org’s work is seen in the lives it transforms. Women who previously spent hours each day fetching water now have time to pursue education and employment.

Families can access clean water at a fraction of the cost they used to pay to water vendors, improving their economic stability and overall health.

Innovative Solutions at the Household Level

One of the most remarkable aspects of Water.org’s work is the resourcefulness and innovation demonstrated by the communities they serve. In rural areas, households use loans to implement solutions like rainwater harvesting systems, hand-dug wells, and small electric pumps.

These solutions are tailored to the specific needs and circumstances of each household, highlighting the importance of a bottom-up approach.

The Role of Partnerships: Scaling Impact

A key factor in Water.org’s success is its emphasis on partnerships. By collaborating with 140 financial institutions worldwide, the organization leverages existing networks to reach more people effectively.

These partnerships enable Water.org to scale its impact and ensure the sustainability of its projects.

The Future: A Parth to Universal Water Access

Gary White is optimistic about the future. He believes that with the right financial mechanisms in place, universal access to water and sanitation is achievable within our lifetime.

The success of Water.org serves as a proof of concept, demonstrating that with innovation, determination, and effective use of resources, we can solve one of the world’s most critical challenges.

A Model for Change

Gary White’s work through Water.org exemplifies how innovative thinking and a commitment to social impact can drive profound change. By transforming the traditional charity model into a sustainable, scalable solution, Water.org is not just providing access to water; it’s empowering individuals, improving health outcomes, and fostering economic development. Gary White, the world’s best water entrepreneur, shows us that real impact comes from combining compassion with innovation.

In a world where millions still lack access to basic necessities, Water.org’s approach offers a beacon of hope. It reminds us that with the right strategies and a bit of ingenuity, we can create a future where everyone has the water they need to thrive.

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My Full Conversation with Gary White

These are computer-generated, so expect some typos 🙂

Antoine Walter: Hi Gary, welcome to the show.

Gary White: Thanks Antoine, great to be here.

Antoine Walter: I’ve been waiting for the day for now, at least two years. Since I read your book, The Worth of Water, but I want to go straight into it. We had this update of the word bank looking at what’s missing in terms of money so that the word gets access to water.

At the time of your book, it was 116 billion a year more that had to be invested. Now it’s updated to 140 billion per year, just because we didn’t take action. So of course 2030 is coming. Closer and we’re not meeting the goal. What’s missing is 0. 2 percent of the world’s GDP, but still the word doesn’t put that money in water.

Why?

Gary White: Well, you used to like to start off with the easy question. So it’s complex. There’s a lot of reasons for that. First of all, there’s competition for those same dollars across other sectors, other infrastructure. And a lot of that is, is much more visible. You know, you see public transit, you see roads, highways, bridges, you see telecom, and it seems to be much more visible to people than Of like the pipes that are in the ground and the sewers that are in the ground.

And so it takes some pretty significant events like you see, you know, in Cape Town or Sao Paulo or now Mexico City, in order for the attention to get focused on water and sanitation’s even harder. Also, as we look at low and middle income countries where we’re focused on with water.org and, and water. is the sense that there’s not bankable projects there, that there aren’t investments that are ready to go.

And a lot of that’s true. It is a big need in terms of water and sanitation facilities to have more skilled training, to have better business practices, to be more ready for investment. And so that holds a lot of the capital. back as well. That’s what we’re, we’re focusing on trying to close that, that financing gap.

Antoine Walter: Just to be sure I understand that one. That means that we look at the bottleneck and we think it’s the money because the money is missing. But even if more money was available, it would not be deployed because the bottleneck is somewhere down the vertical.

Gary White: It’s like an onion, right? To quote Shrek.

There’s layers to this, you gotta peel them back. The kind of proximate cause seems to be lack of financing, but why isn’t the financing there? Because you don’t have the financial returns, you don’t have the risk reward profile that’s correct. And so, that’s kind of where we’re starting to attack the problem now, as we look at kind of top down finance.

Financial Strategies for Water Access

Gary White: I think, you know, you saw in the book what we’ve really focused on a lot is bottom up finance, helping women living in poverty get access to small loans so that they can get the water and sanitation solutions that are best for them. Oftentimes that is needing about a 200 or 300 loan to pay for a connection fee to a utility so that they can get water on a regular basis at a much cheaper rate than buying it from water vendors, sometimes 15 times more per liter, buying it from a vendor than getting it from the pipe.

Well, the question then comes up like, you know, we’ve helped 66 million people create this demand from the bottom up. by getting access to small loans for water and sanitation. But what happens if the pipes aren’t there to connect to? And that’s where the top down investing needs to happen. And so we see this need to kind of complete the equation as this demand is generated from the bottom up.

And it’s generated because this is generating tremendous value for people. That’s why they want access to water. It increases their livelihoods. It lets girls go to school. It lets people be healthier. And kind of gets rid of all of these coping issues. costs that they experience. But what if when they want to connect to the utility, the water grid isn’t there?

And that’s where we’re starting to focus now more with water equity with our water and climate resilience fund. That’s the fifth fund that we have launched at water equity so that we can work on investing in that infrastructure and find the bankable deals that are going to provide the financial returns that our investors are looking for.

There’s a

Antoine Walter: lot to deconstruct. Yeah. You mentioned coping costs. I think to me that was the most marking statistic in the book. You’re showing that, I’m going to just steal your words, that it’s expensive to be poor. Yes. And that it’s 300 billion dollars a year that the world is paying because some people don’t have access to water.

So it is, it is. a pure cash positive move to give access to people to water and still we don’t do it.

Scaling Water Solutions Globally

Antoine Walter: I’ll go back to the number of people you’ve helped, but if I got the statistics right from your presentation, 75 percent of the people you’ve helped are in rural areas. Yes. To which infrastructure do you connect in these places?

Because mostly it’s not existing. So you have this kind of chicken and egg. Where do you start?

Gary White: It is kind of a split. So you think what’s defined as rural in India, for instance, and oftentimes there are scattered houses around kind of a center, you know, a panchayat, they call it. In those situations, there is this ability to have a centralized water storage tank with a pump to then have a distribution network that covers those areas.

But beyond that, you get to a certain point, you’re right, that they’re so rural that you’re not going to have a centralized network. And that’s where kind of the beauty of the water credit program comes in because our financial Financial partners around the world are lending for whatever solutions households think are best for them.

So in very rural areas, you see people using rainwater harvesting, for instance. So they can take out a loan for a tank and guttering so that they can capture water from their, their roofs. They can take out a loan for a small pump and sink a well. There’s some low cost ways to do borehole and hand dug wells.

I was just in Indonesia, uh, last week and I saw, you know, several people. Were taking out loans so that they could make their hand dug wells deeper. Because of drought there, these wells are starting to go dry, and so people will take out a loan to dig a deeper well to line it, to make it more serviceable for them over time.

It’s incredible how resourceful and innovative people. are in these conditions because they need water, right? They have to have water every day or else they’re not going to survive. And the question is, how do you kind of break down the barriers for them between what they need and, and water? And that’s what we’re trying to do by saying, look, here’s some capital.

You guys know what you want. You know that you want a hand dug well here and you need a loan for that. Or this person over here wants a rainwater harvesting system, or this one, you know, wants a little bigger loan and they’re going to put an electric pump to get water and build a tank. And maybe they’re going to also then use that water to create a business.

I met women in India who once they had water, they started making these cinder blocks out of kind of the local materials that they had there, so they had started a business because of that. So I think we fail to imagine how much value is created for people by water and how they can turn that into a means of production to boost their household income.

And this is why these loans get repaid at a rate of 98%.

Creating Sustainable Water Infrastructure

Antoine Walter: That’s the decisive thing, which is you are loaning. Money to some of the poorest people on earth, more or less without background credit check and they repay you at a 98 percent rate. So that means it is simply profitable to get access to water, which is a difficult message to bring across.

Gary White: Yes.

Antoine Walter: You have not started that way. You have a history of being part of the water decade of having been doing like NGO, more of a traditional fashion before you did that pivot, which got you to get qualified by Tom Ferguson. When he was on that microphone as probably the best water entrepreneur. How do you get that shift?

What nudges you to go toward a credit and say that is the right approach?

Gary White: I’m not a finance guy by training. I have three engineering degrees, right? So to me, the benefit in the engineering degrees is that you’re taught how to think. You’re taught to find the problem, diagnose the problem, and then kind of match the solution to the problem.

To me, that is what drove me, that, that mindset when we started an NGO that was about drilling wells and basically raising philanthropy, drilling a well, giving the project away and moving on. And then you, you look at that solution and you compare it to the problem, right? And it’s pretty quick to emerge that there’s no way that there’s going to be enough charity in the world ever to solve that problem.

And so you’re left with this conundrum, like what do you do? Do you bury your in the sand and keep doing more well drilling? Or do you like Try to innovate your way out of it. And I was fortunate at the same time to be getting insights from poor women around the world. You know, I was traveling the world, sitting with women in their communities, visiting them in their households, just trying to understand how did they cope with their water poverty.

And they all cope, right? Because today, everyone in the world who woke up Today. Got water somewhere. It’s just a question of how much they were paying for that. And in terms of their time, in terms of their health, in terms of their girl’s future with their education, in terms of money, hard capital costs.

I did my, my research for my graduate thesis in Honduras, and I saw people there who were paying 25 percent of their income to purchase water from vendors. So you. get these insights that women are already paying for water and that there’s not going to be enough charity in the world to do this, but then how do you nudge this financial system, this financial infrastructure towards the poor?

And that’s where we don’t make these loans. We’ve never made a loan. What we’ve done is gone out and nudged the system, nudged those who are already doing microfinance, those institutions that already have a banking relationship with some of the poorest people, and we said to them, look, there is a product here.

Now you’re loaning for sewing machines, you know, and a woman sews clothes and she has cash flow by the end of the week. You’re loaning for a cow, we have cash flow by the end of the week selling the milk. And what they didn’t understand is, like, how this could be a loan product that would actually be a business or generate money for them.

So they didn’t trust that this would be a loan product that would work. And what we did, we used our philanthropic capital to say, look, we’ll de risk this for you. We’ll provide some guarantees. We’ll help you do the market research. We’ll help you understand that there is a product here. And once we broke through that barrier and these microfinance institutions, MFIs, saw that there was a loan product there, that’s when we understood that like there is the potential.

to tap the capital markets in a way that could be beyond philanthropy. Again, using philanthropy as a catalyst to set in motion the market correcting work that needed to be done so that now 66 million people have availed themselves of these loans through our partner network of 140 financial institutions around the world.

Again, this gets back to one more theme and that is partnership. It’s like we were not going to go out and start a bank. in every country that we’re working in, it’s like, how do we get those right partnerships in place so that can happen at the local level? And that was then completing the picture of the journey from like drilling wells and start to finally match the magnitude of the solution to the magnitude of the problem with the capital markets.

Future Goals and Challenges

Antoine Walter: I have two questions on the 66 million. The first is simply a big number question. If we look at what countries do, what different institutions do, what different places do, I would tend to believe that. as a single organization, the fact that you brought access to water to 66 million people probably puts you in the top Mm-Hmm.

somewhat, if not simply on the top position. Yeah. Mm. How do you look at that? Mm-Hmm? Is it a positive sign that you’re doing incredibly well or is it quite a concerning that you’re a bit alone? Yeah. In that bracket,

Gary White: I don’t wanna measure us. by how we’re doing relative to others. Everybody is pitching in, you know, all hands on deck kind of approach to this.

I want to measure our success by, yes, the number of people we reach, but also how fast we’re closing the gap between everyone getting water and where we are now. And to me, that. is the only way to look at the problem and to challenge yourself and to innovate. We’re here at the Blue Tech Forum and there are a lot of tech solutions that are being innovated and those are important.

We need technology in this area. But despite my three engineering degrees, I’ve come at it from the choke point of Finance, and we need to drive more capital into this so that there is capital to invest in these aquapreneurs, these people who are out there innovating their starve for capital as well.

What we’re trying to do is to bring so much more capital into the market in a way that can invest in those types of startups and entrepreneurs that can also invest in, you know, women who are making a few dollars a day and that can also work with utilities. A lot of utilities. Around the world in these countries where we focus are completely strapped for cash and to your point at the outset, it’s like, why isn’t the capital there because there’s so much more competing for that.

So if we can work with utilities, a lot of utilities now are doing concessions where they’ll allow consortium to come in and bid on a project. to get the infrastructure built. Sometimes they give a concession also to run that utility for a while, until then it transfers over to the utility, to the local government, to be able to then own that asset.

And so we’re focused on that type of capital coming in as well. And that’s where, you know, we’ve just launched our fifth fund. fund at Water Equity, which is focused on water and climate resilient infrastructure that will be focusing on investing in that type of work with utilities, with high growth companies that are focusing on goods and services to those utilities and to the water sector.

So we have twin pillars where we can invest in projects that are being developed. And then we can also invest in growth companies that have technologies. The thing about our asset manager at WaterEquity versus a lot of other asset managers in the world, even those that focus on water and sanitation.

Ours does this through the lens of it has to be delivering impact around climate and low income populations to make sure that they are disproportionately benefiting from these types of investments. And that’s what we are going to continue to adhere to, because that’s why we exist from the first place, is because it’s people living in poverty, that have the greatest needs, and that’s kind of in our DNA to go after them, regardless of whether it is philanthropy or impact investing.

Innovative Financial Models for Water Projects

Antoine Walter: But how do you create a category? Because you describe that very well in the book, how philanthropy money is something that exists. It’s money which goes out there, which is spent, and which you never see coming back. Then you have investment money, which is money which you put with various levels of risk, but you expect it to have a return and let’s put sustainable and impact investing aside for now.

The main criterion is it has to make returns and you’re somewhat in between. You’re saying we don’t have to waste that money. We can have work harder. Make it work harder. How do you create that connection?

Gary White: It is challenging because, you know, most of us tend to think of things as either this or that. I think it’s kind of the way that the human mind tends to work.

It’s black and white, it’s yes or no. And it’s philanthropy or it’s investing that’s going to yield a market return. What’s key to this is that there is immense value being created for poor women when they get access to water. Like I said, they’re starting businesses, they’re saving, you know, a lot of money if they’re buying water from vendors.

So there is value being created. And what do investors need? They need to invest in things that are going to create value or else they’re not going to get repaid. And so once you kind of make it undeniable that poor people aren’t a charity problem to be solved. But they are. actually are a market to be served, then the capital markets will start to pay attention.

And I think that’s what we’re trying to do to bridge that gap. We’re doing what I call creating the financial plumbing that allows those investors to find women who are living on a few dollars a day, and kind of take the friction out of the system. When you start to have a proof point, when you have 66 million people getting access to loans, 5.

5 billion in loans have now churned through our partner network and that they’re repaid at an 98 percent rate, then when you go out and launch an asset manager and you have that as an underlying asset. That it’s not easy by any means. You know, our first fund was just friends and family. You know, Matt, my co-founder Damon, put in the first million for our first $11 million fund.

And then, you know, we created a $50 million fund and then we did $150 million fund and another one. And so now we’re on our fifth fund. And the reason that. is because they see it as a way to, yes, get competitive financial returns, but also to have human impact and social impact. And, you know, for businesses, ESG impact.

To answer your question is it’s really hard. to bridge those two worlds. But now that we are successful getting the investment capital in, it actually helps us raise more philanthropic capital to scale this. So the Bezos Earth Fund has provided a 10 million philanthropic grant to us. Amazon has provided a 10 million grant.

Many other, you know, corporates and foundations have provided that philanthropy to us to take this to the next level. Our interim goal is to reach 100 million people with another billion dollars in investment capital. And the reason we’re going to be able to build that investment capital portfolio is because we have the philanthropy to go out and start this up.

If you look at what we had to do to create water equity as an asset manager, it took us about 20 million dollars to invest over the course of many years to stand that up. We had to invest that philanthropic capital early before we had a fund to hire the expertise to put the talent in place around the world that we needed to have the investment deal flow before anyone was going to invest in us.

So you see, that’s the Cadillac power of philanthropy. We were able to raise enough unrestricted philanthropy to invest that 20 million to get water equity up and running so that that philanthropic capital could leverage the markets. And now water equity has grown. raised nearly a half a billion dollars in committed capital that wouldn’t have been there if we didn’t put the 20 million in philanthropy.

So that’s how you get the philanthropy to work with the markets.

Antoine Walter: So you’re saying it’s not only expensive to be poor, it’s also expensive to help the poor to come out of that experience. I mean, 20 million just to create the fund, it’s a commitment because you’re creating, again, something which is a weird animal.

But to my napkin calculation, because I have so many questions, you mentioned the 5. 5 billion dollars of money which you’ve deployed. You also mentioned the 66 million people who gave access to water. I do stupid maths. 5. 5 billion, which I divide by 66 million, makes about 83 dollars per person. So that’s what it takes to take someone, indirectly bring them out of poverty because you give them access to water.

If you multiply that by the 2. 1 billion people who don’t have access to water in the world, again, I know I’m doing stupid math, but just to give you a sense of the scale, that’s 175 billion. But it’s a one off. It’s not like the recurring money we need to put every year to reach the same goal. And if we assume you can scale to the roof and beyond your 98 percent payback rate, that means that money is not gone.

It’s money, which keeps. Working, you just have to have that capital. If I take now the word bank numbers and I extrapolate them towards the goal of 2030, SDG6 is reached. The traditional way it would cost 1. 7 trillion. Your way, it costs 175 billion. So 10 times less. I’m an engineer as well. So I’m also out of water when it comes to financials, but you’ve kind of found the martingale to be 10 times cheaper to reach the same goal while still having the money working.

I know I’m taking a ton of paper assumptions here, but what prevents you to go from 66 to 100? 200. And ultimately, everybody has access to water.

Gary White: What prevents us is like that next barrier that we’re trying to remove. And yes, if you do the numbers on it, and the number of people we’re reaching per dollar invested is really strong.

But it presupposes that those people have a water grid to connect to, to have the infrastructure there. You can think of, you know, a woman showing up at a utility saying, here’s my 300. I want to connect. to this utility, then she gets connected. But that also presupposes that there was a utility to connect to.

And so those numbers have to be aggregated in a little bit different way. But the point is, is spot on. And that is, if you’re just waiting for all the capital to come from the top down and supply everybody with water basically for free, it’s never going to happen. And if you want to have people have the opportunity to find the solutions that they want from the bottom.

up. That’s going to be limited by the solutions that are in the marketplace or that are there with utilities. And this is where we’re at with our next evolution with water equity and water and climate resilient infrastructure. So we know we’ve been very successful at creating literally millions of micro loans from the bottom up.

But now we need to come at it from the top down for two reasons, at least. One is that the capital is not being invested in those utilities and in the infrastructure to provide that service. Number two, when that is being invested, it isn’t always being done by looking through a climate lens to understand what’s the vulnerability in that infrastructure that’s going to make sure that it’s going to be climate resilient.

What we’ve done is, because we realize we have to look at this from a project finance, perspective. We’ve built, you know, 140 MFIs, financial institutions in our network. And that has been pretty straightforward to go out, especially because so many of these MFIs tell other MFIs about it. And then the word kind of spreads.

So there are kind of their own marketing mechanism for us. But if you want to go and build water infrastructure in Brazil or in Kenya or South Africa or India, it takes a whole lot more than convincing one MFI to do this. So the problem largely is that people talk about there’s plenty of capital available if you just have the right deals, if you have the right infrastructure play and develop the project in a way that convinces investors that it’s going to be cash positive.

You have a lot of utilities out there that are saying we need investment and you have the capital market saying it’s there, but what you’re missing in the middle is like the bankability of a deal, deal by deal by deal. That’s where we’ve now, again, we’ve used some of that philanthropic capital to launch what So WaterConnect is a separate entity that is in the business of understanding what is needed to develop a project like a water treatment plant that serves a poor neighborhood.

Understanding what it takes to get that deal to bankability. Sometimes that can take up to one or two percent of the project cost. If you’re talking about a hundred million dollar facility, it might take a couple of million dollars. to do the study, the feasibility study, the environmental impact study, the climate resilience part of that.

All of these things that need to happen that give investors confidence that this is bankable. We’ve used philanthropic capital to, again, go out and hire all the people around the world that we need to be credible in that space to develop projects. And so we’ve just launched that, uh, in the last couple of months.

Now, what we have is philanthropic capital coming in to help.

And then we have water equity over here ready to invest. So what we’re able to do is to provide all of this under one roof. So when we are using WaterConnect to go and develop the project, we know what it’s going to take to get water equity to invest. We have the checklist, if you will, of the investment committee at water equity as WaterConnect goes out and builds a bankable deal so that we have a high probability that the investment will come.

That’s the key to this because this has been disaggregated so much with technical assistance funds and some blended finance. A facility over here that’s doing the technical assistance, and then you have the investors over here, and they’re not really coordinated, so it can take years for this to happen.

And so what we want to do is compress that, and by putting this coordination under one roof, and having kind of a single point of management for that, we’re able to kind of make that happen. The deals flow faster so that the infrastructure gets built. And so people can connect.

Antoine Walter: Some numbers, which I think go to your points, the typical projects we’re discussing here, if it’s done in a PPP and developed by a private partner, it’s going to take seven to 15 years to go to market.

And when you speak with us, private partners, they say, If only we had a better link to the utility, a better link to the DFIs, we could take that down to one to two years because all the rest is just the efficiencies of the system.

Accelerating Project Development with DFIs

Carlos Cosin: If we evolve to the DFIs in the process and we are doing now, from the beginning, instead of seven years to develop a project, you can develop ten years.

Two years, three years, if you reduce the time and the money to develop project will be more attractive to bring any other players, because nowadays, if you say that we are now closing a very big project, 1. 5 billion, six years of working, if you can bring seven years ago partners and you explain that this is my project, nobody, nobody believe me.

Join forces with you. But if DFIs are in this position to serve this risk and to accelerate the process, for sure they will facilitate for any future projects the process for new players. What you’re

Antoine Walter: saying is that by having all of those under the same roof, well, you’re getting rid of the inefficiencies and hence you can be faster to action.

Gary White: That’s exactly our theory of what we’re, we’re trying to do. We hear a big demand for that in the marketplace. The Development Finance Corporation in the U. S. is one of our investors in the previous funds, and they’re looking to come into the infrastructure fund as well. I see that compression and that under one roof approach as being attractive.

Challenges and Innovations in Water Equity

Antoine Walter: Now to my challenging question on that. I fully understand why you have to go out and do water credit and why nobody else does it because you have to prove a point, you have to start a thesis. Of course, you show that it works. But still, it’s pretty special. We discussed about water equity, how that is a weird animal where you have to create a category and there as well, it’s successful.

It works, but someone needs to start it. And that’s you.

Market Gaps and Unique Approaches

Antoine Walter: WaterConnect though, there are project developers out there in the fields whose job and livelihood is to do that. So what’s the gap in the market, which you’re filling with that? Is it because the existing ones don’t want to go in the geographies where you’re at?

Is it because they don’t want to take these kinds of projects or is it simply because of what we said of bringing everything under the same roof?

Gary White: By and large, the. The project development that’s happening is happening in the industrialized countries, more affluent countries, and it’s not as complex possibly as trying to do it in a low income country that doesn’t have a strong track record of sustainable utilities that are there providing these services.

That’s one thing. What we are doing that I don’t believe any other project development company is doing is coming at this with the lens of low income populations to really make it part of our investment thesis, to make it part of our impact metrics that we are adhering to for our investors. Part of those metrics aren’t just the financial returns, but they’re like, what’s the demographic of the population that’s going to benefit from this?

What’s the climate? impact that’s going to result from this. So we believe we are unique in the market in terms of having this different lens that looks at the human side of this, the socioeconomic indicators of the population we’re serving, the adaptation value of a project that we’re bringing in to make sure that that completes the circle, right?

Nobody wants to be investing in a project where the source water wasn’t carefully studied to understand what’s happening with climate change in that watershed. To make that project work, we’re baking all of that in and we believe that we don’t have all the answers yet, but we believe we’re building the team and the expertise that we need to deliver those other impact components that go beyond just the financial returns.

We also believe that it’s not just going to be water equity. as the investor that’s going to come in to the sector and provide those returns. But again, we want to like use our approach to kind of illuminate the path to help the capital markets understand that yes, there is a way to put these different pieces together in a way that allows.

You as an investor to come in and meet your investment criteria and get the impact that you want. So hopefully by illustrating, you know, we’re not even to a half a billion dollars of capital committed yet, but hopefully we’ll get up into the billions and then that should be enough of a signal effect.

We hope for other investors to come in through their own activities. world. That’s the, the vision.

Antoine Walter: So you’re crossing the chasm so that once it’s then in the main market, people will realize that it’s actually a suitable path and they will take the ball and keep it rolling.

Gary White: Absolutely. Absolutely. And we’re seeing all types of investors come in for those financial returns and more.

Investor Interest and Financial Returns

Gary White: The fourth We had Starbucks invest in that fund. We had EcoLab, we had Reckitt, we had Caterpillar, Dow. These Fortune 100 companies that are now not using charity, they’re using their balance sheets to come into the funds. Why are they doing that, right? One is because There you can get a financial return.

Two is that this has potential to help with their ESG score. So many of them are focused on having a positive water footprint, water, uh, resilience in their operations. And so they just see this as a way for them to learn more about water, have impact in water, ESG, and other areas like replenishment that they have as their corporate goals.

It’s trying to understand, you know, what are all of the needs in the marketplace when capital comes in, because it’s not just a black and white, we need X percent of financial return. We don’t care about anything else. It’s like, we have a bar that we can’t go below with our financial return, but we’ll invest if we can get all these other attributes as well that are a value to us and our customers.

Antoine Walter: It’s numbers, it’s statistics, it’s theory, but today more than 50 percent of investors have. impact as part of the investment thesis. So I think you would check all the boxes for impact. You mentioned financial returns and I don’t want to say something stupid because those numbers matter. But if I’m right for your fifth funds, you’re aiming at nine person return.

Is that about right?

Gary White: I can’t speak to the actual returns and numbers, but we are aiming for competitive financial returns and having a risk reward profile that is appropriate,

Antoine Walter: which leads me to something I’ve noted myself when it comes to. I’m covering this kind of topics. I had the rural water network on that microphone, discussing what they do.

I had project developers discussing what they do, and I’m publishing this podcast on different platforms and different platforms have different audiences and different demographics. And that is on that specific topic. It shows because whenever I push that on LinkedIn, the podcast platforms, I get super positive returns.

Like that’s great. It’s good that those people show that there is a path where it is. just sufficiently profitable that it’s sustainable and so it’s creating a snowball effect.

Public Perception and Education

Antoine Walter: You’ve published that exact same piece of content on TikTok, YouTube, Instagram, wherever else, like, Oh my God, and what’s next?

Will we have to pay for children’s toys? They will put a tax on children’s toys and maybe I have to pay for the air I’m breathing. And oh, it’s again, those big corporates which try to privatize water because people have seen Netflix rotten. And so they see Nestle and the likes and they do an association.

So there is one element which is educating the professionals and the financial market. There’s another element which is educating the public. Is it also one part where you’re looking at or you say, as long as the financial people get it, good for us.

Gary White: There’s a lot of wrong ways to solve a problem like this.

And we’ve seen those with privatization, not only privatization of the water infrastructure, but privatization of the water resource as well. And certainly that is something that we would never espouse to do. And it was very wrongheaded yet. We also know That’s there. isn’t enough capital going into the system right now, and that we can’t just wait and make water free for everyone because it’s, it’s a precious resource.

It needs to have a price so that it will be conserved. The challenge is making sure that people who are in abject poverty, and we recognize that our approach, water credit and water equity, isn’t going to be the complete solution because there are people who are so poor and so rural that they are not going to be able to get this through a loan.

But the point is, let’s not treat everybody in the world who doesn’t have access to water is equally poor. Let’s segment the market and help those who all they need is a loan to get access, help them get that. And then what it can is it can free up tremendous amount of resources from governments and other capital providers.

To say, look, this part of the market, we can do this with investment, this smaller part of the market of absolute poverty, we now have the resources that we’re saving that we can apply that to people who are there. You need to have tariffs that are equitable. So in some countries you have the first amount of water that’s used each month, a few cubic.

meters free, and that’s great. But then if you’re using more cubic meters because, you know, you’re not conserving or you’re running a business with that extra water, you see, you know, people doing car washes, even in some low income countries. It’s like, well, yeah, if they’re using that amount of water to go start a business, they should pay more per cubic meter.

So there are ways to construct the whole ecosystem in a way that brings in the capital that’s needed, but also helps ensure that the poorest among us get the subsidy that they need.

Role of Governments and International Organizations

Antoine Walter: You mentioned the role of governments. I’m regularly told that I’m the one Who’s wrong, because I had super high expectations from the water conference at the UN last year.

I mean, first since Mar del Plata, 1977, once in a lifetime, almost. It’s going to be a big event, everything, the conference starts. And actually the pre conference was incredibly good because the first thing they proposed was an interview of you and Matt Damon. Uh, so I was like, Oh, well, they, they get it.

It’s the right people. It’s going to be, it’s going to be great. And then they do like an opening ceremony. And then from there on, it was not only downhill because downhill would mean. The beginning would be pretty good. And then it goes down. You know, really, it went to the bottom and it stayed at the bottom for the entire three days of the conference.

I personally went out of that thinking, forget it, neither the UN nor simply the countries will be able to solve that. The solution has to be somewhere else. And you say very, very rightfully that the solution can be somewhere else to a certain extent, but there is still a section of the path. problem, which is to be solved by the nations.

Do you see a behind the scenes, which would be more positive than what I experienced watching live from home, which would bring back some hope in these international organizations to solve the problem?

Gary White: I do, but it’s not huge. It’s a spark of hope rather than like a flame. I think right now there is no one.

who doesn’t want to solve this problem. There are people who devote their lives to it in government in these, these multilateral organizations. But you do tend to see kind of a calcification of approaches to solve the problem and you, you don’t see a tremendous amount of innovation coming out of those, those institutions.

It’s a government worker can like go on their whole career just kind of doing what they’re doing as opposed to like. sparking an innovation, and that’s the safe path for them. The system is kind of built to not move very far one way or the other. And that’s where I think you need to have the private sector.

You need to have innovators kind of coming in to kind of jolt the system in a way and develop the evidence base and develop the proof that this is a new way of doing it. Then they’ll follow. I really believe You know, institutions like the UN and the World Bank, they’re paying a lot of attention to what we’re doing in terms of mobilizing capital markets for this.

And they’re getting on board. They’re putting it on their platforms. The World Economic Forum was featuring a lot of what we’re doing. We had a pretty prominent place at the UN Water Conference. I just came from the World Water Forum in Bali and I was on more panels giving more talks there than ever before because people do see this and are looking at it and how does it incorporate with what.

They’re trying to do with blended finance and other platforms that they’re creating, you know, the glass is more half full than half empty, I think,

Antoine Walter: but it isn’t easy. If I try to bring that in my words, that’s somewhat like those institutions are by essence and by definition kind of laggards. And I mean that with no negativity, just because it’s the way they’re built.

So you have to be the one to ignite and to create the movements. But eventually, if you bring it past the tipping point, they will take it from there.

Gary White: Yeah. You talked about crossing the chasm earlier. I imagine you read that book, you know, the early adopters, uh, the early majority and then the late majority and then laggards.

Right. Yeah. So I think I got that right. It’s been a while since I read the book. Uh, but yeah, Yeah, we want to position ourselves kind of in that innovation space and show that yes, you can cross that chasm where most of the efforts just kind of fall into the chasm and you got to get over to those kind of late adopters, especially that’s where I hope we have our sites set because again, it’s, it’s not.

us that’s gonna solve this problem. It’s gotta be us hypothesizing new ideas and building an evidence base that’s undeniable so that the capital markets will come in. And I think it is interesting to see. I mean, we don’t have, you know, we don’t have the UN, we don’t have governments like investing in our funds.

Who’s investing in our funds? It’s high net worth individuals. It’s foundations like the Skoll Foundation and the Hilton Foundation. Foundations can take a little bit more risk. And then we have corporates in the fund. Four, you know, that was $25 million from Starbucks. They invested. What we’re seeing is real money coming in to this from the private sector, and what we hear from the World Bank is like, Hey, you know, we would love to work with you more on this because we’re trying to leverage the private sector to come into this is just told by a former World Bank staffer that.

The World Bank is right now only mobilizing about 40 cents for every one dollar that they bring, 40 cents of private sector capital. And so I do think they are looking at us. We’re talking to them. It’s like, how can we work with you to one, help you fulfill your mandate more of like, not just investing in infrastructure agnostically, but investing it in a way to ensure that the last five or 10 percent of the population get connected, which is very important to them and a challenge for them, but then also a way that brings in the private sector.

Private capital markets to blend with the work that they’re doing. And that’s what we certainly see with, with water equity. I’d love it to see, you know, us doing that project development and providing 10% of the infrastructure costs and then see the bank come up with the rest or put it together through the local investors in those markets.

That’s what we wanna be able to Capital

Antoine Walter: kind of blended capital and Exactly. I have one last question on, on the other side. O of that. Let’s cope because we’ve talked about your way in the middle. We’ve talked about how institutions will eventually get the ball rolling. But what happens to traditional charity?

Future of Traditional Charity in Water Projects

Antoine Walter: Does it still exist in the future? And let me take an anecdote example to just illustrate that because you’re pretty familiar with some star power given your co founder for a different generation. The number one star in the world. Mhm. Today is probably Mr. Beast. He’s the largest YouTuber on the platform, must have something like 260 million subscribers.

And last year, it got very well publicized, but already two years before he did the same. So he did twice to drill 100 wells. I think the first time he drilled 30 wells and the second time he drilled 100 wells. The reaction to that was a mixed bag. On one end, people say, Hey, before they had nothing, after they had something.

But you also have to acknowledge that there are about 300, 000 abandoned pumps in Africa. So again, I’m going to steal your word. You’re saying it’s the difference between doing it for them and doing it with them. Will that still exist in the future? Or does that have to be somewhat replaced for the better with your kind of approaches?

Mm

Gary White: hmm. I think it does have to be replaced with better approaches. Any water NGO that’s out there operating this space, there’s probably more than a thousand of them. water NGOs that are out there doing that type of what we call direct impact projects. And I think that the ones that have been doing it for a while, they’re always looking to find ways to ensure sustainability and having different mechanisms built in.

And sometimes that works, but frankly, still it doesn’t most of the time. If you kind of go back and look at projects five or five or 10 years later, there needs to be. kind of an increase. Those organizations always need to be thinking about how can they do that better to get things more sustainable, and a lot of organizations are.

But I think we also just need to rethink how philanthropy works. What we tend to see in this space is that everybody who lacks access to water is in need of charity. And so that’s kind of the, the thesis that we have started from. And that’s the thesis that I started from, you know, back in 1990, that that was what had to be done.

But If you look at how the nature of poverty has evolved and changed, you look at, you know, I love this book by Hans Rosling, Factfulness, and just talking about how people perceive how the world is doing with respect to poverty, how we perceive it as it continues to get worse. If you look at the numbers, you know, Bill Gates talks about this a lot too.

If you look at the numbers of what’s happening, billions of people have lifted themselves out of poverty. We’re still stuck in the water sector as thinking about how it used to be decades ago, when really now there are billions of people who could participate, who’ve lifted themselves out of poverty.

And when you come out of poverty, what’s one of the first things you want? You want water. You don’t want to be spending all your money and all your time to get water. So, like This is why people are taking these loans out, you know, they get to a certain level of poverty and it’s like, now I can take out that loan because it’s going to add all this value for me.

So I do think we need to kind of help catch up our charity mindset with the market that we’re trying to serve. What we’ve basically said, we stopped doing direct impact work. Not because we didn’t think it was still good, but if the other thousand NGOs are doing a charity led approach, there’s probably room for one to focus just on a market based approach.

And that’s why I think I’ve been doing this for a long time, and I’ve often said the things that determine our success are much more what we’ve said no to than what we’ve said yes to. And you have to be very disciplined, especially when you’re a smaller startup, you have to say no a lot. You have to understand where your sweet spot is, where what you’re doing is unique in the marketplace and then you have to say no to a lot of other things.

I see all kinds of entrepreneurs, you know, like I said, I was just in Bali, I visit the World Water Conference. I get all kinds of people pitching me. You know, at water. org, in fact, at the water conference, one gentleman followed me into the bathroom while I was at the urinal and was pitching me the whole time.

It’s a crazy kind of thing. I think that’s amazing that people have such passion for this, but, uh, we have had to say no to so many things. And that’s why, you know, we now have the success we’ve had on water credit. Why water equity is. It doesn’t mean that the whole ecosystem needs to have different players.

It’s just that that’s kind of where we focused.

Antoine Walter: You mentioned the passion. You mentioned how you’ve started in the nineties. I wish you a prosperous life, but within the book and repeatedly, you’re saying that you want to solve that. in this lifetime.

Confidence in Solving the Water Crisis

Antoine Walter: What is your level of confidence that this will happen?

Gary White: High. High. Because what we see is that there is this underlying market, this underlying demand, this underlying willingness to pay for these services. And we see You know, women taking up solutions on their own to solve their own problems. We definitely know that water creates immense value for people.

It’s clear. People coming out of poverty are willing and able to pay for that at a fairly low level of service and then eventually they can elevate that. What we also know is that we have created the financial plumbing that can connect those women to the capital markets. The capital markets have different risk return profiles, as we’ve talked about.

Sometimes they build in more ESG in terms of what they see as the return. But by and large, we’ve gone from a system, when I started in this business, where every dollar that went into water and sanitation through philanthropy went in and was spent and it was gone. Now we’re seeing us able to bring philanthropy in and cycle it over and over again.

That was just breakeven, but then it evolved to like actually being able to provide financial returns. So if you look at that journey, if you look at that value that’s created by water for people, if you look at that philanthropy getting multiplied over and over again, if you look at having the financial network in place that can find those projects to invest in and have a connection to the capital markets and you know, the capital markets are theoretically infinite, right?

There’s just. So much inertia in all the machinery that’s in there. It’s calcified, it’s stuck, it’s rusty, it moves at a slow pace. But that’s how capitalism works. If you create value for somebody and you have capital, they’re going to find each other. And what we’re trying to do is to kind of oil the machine to take the friction out a little bit.

Once you Jolt that all into place and let the system kind of sort itself out. Then yes, I do have confidence that that’s going to happen in an accelerating rate and hopefully I’ll live a

Antoine Walter: long life to see it. That’s a perfect conclusion for this deep dive. And I think it’s absolutely logical with what you said, which is the inertia first goes against you.

But once it started, it goes. With you, because then it keeps pushing to round off those interviews.

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Rapid fire questions:

Antoine Walter: What is your definition of innovation in action?

Gary White: Innovation in action is observing and having a hypothesis about what’s wrong. And then, you know, creating a solution and iterating.

Antoine Walter: What is the most innovative water solution you’ve seen in the past 12 months?

Gary White: Uh, the innovation is at the household level and it’s like saying we can’t be dependent on just one water source.

These are people who are like saying, okay, we need the well. We also know that that could go dry. And so we need to figure out, you know, is there a different way? way, a different loan that we can take out to make the well deeper or to get a pump. And so to me, it’s that the innovation of knowing you don’t put all your eggs in one basket when you’re a poor person living without water and you have to have a plan A, a plan B, and a plan C.

And to me, that’s incredibly smart and innovative because if you don’t have different levels of plan, you don’t have water.

Antoine Walter: In one word, what is the biggest challenge facing the water industry today? Finance. I would have expected that one. Who is a water innovator you admire and why?

Gary White: You know, I would say somebody who didn’t know they were a water innovator, but that I admire, but they turned out to be a water innovator is Muhammad Yunus, right?

Because he built the water. the, the system of microfinance. And so we’re standing on his shoulders. And I think his insight into microfinance is a pretty strong reason why we’ve reached so many people.

Antoine Walter: Did you work one to one with him?

Gary White: No, I didn’t. I didn’t. You know, I’ve, I’ve met him on a couple of occasions and we’ve had exchange of ideas about this.

Antoine Walter: What’s one single piece of advice you would give to emerging water entrepreneurs?

Gary White: I think study the problem. I started going to Ted. Years ago in some of the early days and the reason I went wasn’t to hang out with a bunch of other water people It was to hang out with people who had completely different businesses and ways of approaching things And getting that cross fertilization of ideas So to me the best piece of advice for entrepreneurs is to get outside of your domain and figure out what are those?

Because you can try and kind of put the square peg in the round hole for a long time. But once you get outside of your domain, you might find a different shape peg. And then it all becomes so much easier. And for us, that was like understanding how do you take the problem that you’re solving and you apply something that seemed unrelated, which is microfinance, and plug that round peg into the round hole

Antoine Walter: and then boom.

What’s the common misconception about water innovation that you’d like to debunk?

Gary White: Ah, I think we talked about it a lot. That all people who lack access to water are too poor to pursue their own solution.

Antoine Walter: It’s not the first time I hear Paul giving those figures about the economy, which is unlocked if you give access to people to water.

But I think it’s the kind of refresher that’s, but yeah, it’s, if I open that door, we’re still here in one hour. So what is one water taboo that you broke or you believe we should break?

Gary White: I keep coming back to the same thing and that the taboo. Was that you could, you know, people are willing to pay for water and that they should pay for water.

And they do that because what they pay is only a small fraction of the value it creates for them. And

Antoine Walter: the last one, which is the traditional one, what can and should I do for you?

Gary White: What you should do is get this podcast out to as many people as possible. So I’m sure you’re on that. Uh, but no, I think storytelling, you know, this is an incredible interview, by the way, you, you’ve done a great job.

That storytelling. of the issue and breaking it down for people so that they understand again, I have a great team at water. org and water equity and water connect. And we try to emphasize, you know, storytelling as much as the, you know, the financial machinations of this. And so I think having more people kind of tell the story and breaking it down and drawing it out from us, I think is an important thing.

to do. So I appreciate that. And there’s lots that everybody can do. You know, again, we need philanthropic capital. We need investment capital. Accredited investors should feel free to reach out to us if they want to join in.

Antoine Walter: As there’s a lot that people can do, where can they follow up with you the best?

Gary White: Just water. org. And waterequity.

Antoine Walter: com, two good places to start. You made a super clever move to have your website clear to everybody. Everybody knows where to find you. So yes, Gary, it’s been an, I mean pleasure for sure, but an honor to have you. I’m super happy that it happens because since I read your book, I’ve dreamed of that moment.

So I’m super happy to, to have had that conversation with you. I hope it’s not the last one, but I let you enjoy the rest of the blue tick forum and I hope to see you soon in the future.

Gary White: Thank you, Antoine. Nice job.

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