A huge desalination plant will be built in America next year by a Frisian scale-up: Salttech. For this multi-million dollar project, the client, a lithium producer, wants a guarantee that Salttech has the financial resources to carry out the work. The problem: scale-ups have little liquidity. The solution: the FOM's new product, the export guarantee.
Thanks to the export guarantee, we can show what we are worth to the environment
Jan te Lintelo, CFO and partner at the Dutch Water Technologies (DWT) Group
Salttech is the first company to receive this export guarantee. Jan te Lintelo, CFO and partner at the Dutch Water Technologies (DWT) Group, is pleased. 'Scale-ups like us are too big for a napkin, but too small for a tablecloth. If a customer awards us a large contract but wants us to guarantee a certain amount, we cannot approach a bank for funding. We don't have enough cash for that. We are constantly running into that.
He continues: "Salttech is a member of the DWT Group, as is Biotrack. In the past we worked with Doefonds Fryslân - the predecessor of the FOM - for a funding for Biotrack, and in 2018 we worked with the Doefonds and Rabobank to secure a funding solution for a Salttech export project. So we already knew each other
Proprietary technology
Salttech has developed - and patented - its own technology to treat highly saline water streams. 'We separate all salts from water streams using an innovative evaporation technology. The result of the treatment is clean condensate and salt crystals. The water can be reused in production and the extracted salt crystals often represent a financial value.
For the lithium producer, the ability to produce energy-efficient clean water and recover precious lithium was decisive in their choice of Salttech from Joure.' Te Lintelo continues: 'Because of the broad applicability of our DyVaR technology, we are building up important references in various branches of industry, such as recovering valuable milk salts in the dairy industry and producing clean water in oil and gas fields in the Middle East.
To meet customer demand, we have developed various sizes, from the DyVaR-30 to the DyVaR-360. The number represents the number of evaporation cyclones. We supply a small DyVaR-30 as a container solution with all connections already in place. This is set up at the customer's premises and assembled, connected and started up in a few days.'
The first order for the American lithium producer was a DyVaR-60 container solution that has now been set up. For the multi-million dollar project, the DyVaR-360 installation is manufactured in parts - mainly by the Frisian manufacturing industry - transported and installed by the customer. 'We oversee that process, our engineers and project managers lead the installation and start-up, and local people are trained to work with the installation. We can also monitor the installation via the Internet and offer advice.'
The DyVaR-360 is expected to be delivered in the first quarter of 2023 and can be started up in the second quarter. 'It will be our first time building the DyVaR-360, but the process design is based on the same principles as the smaller variants. We are not nervous: we know our technology works.'
Opportunities
If the export guarantee had failed, there would have been reason to get nervous. 'At the same time as the good news that Salttech had been chosen came the question of providing financial guarantees. So we knocked on FOM's door again. Te Lintelo continues: 'We are very happy with the cooperation from FOM, first with Diederik Jongema, then with his successor Klaas Kooistra. They have done everything they can to help us. The big advantage was that we already knew each other. It took a lot of time, but we now have a solution that not only helps us tremendously, but is also suitable for many other companies. With companies' greater awareness of sustainability, opportunities are opening up for us. Thanks to the export guarantee, we can show what we are worth for the environment.'
New FOM product fills a need
Klaas Kooistra has been investment manager at the Frisian Development Company (FOM) since July 1, after having held the same position at NOM for eight years. He is very enthusiastic about the export guarantee, FOM's new product. 'We can arrange this guarantee in two weeks, which is incredibly fast.'
Salttech is the first company for which the export guarantee was financed, and for good reason. Kooistra: 'As Jan said, Biotrack was one of the first financings from the FOM, then Doefonds Fryslân. So the entrepreneurs involved are well known to us. We know how important this export guarantee is for them. The client wants a guarantee that Salttech can do the work financially. If that is not the case, the customer can claim the guarantee. So that gives them a back-up.'
Solution to liquidity problem
The investment manager explains: "We know there is a need in the market for a product that can provide this guarantee. We spent more than a year developing it. With this, we have the solution to the liquidity problem that startups and scale-ups have in being able to issue guarantees. Note that the guarantee is issued for the export project, then the loan expires. It is so hedged that it is linked to the project. We additionally do a financial test on the company.'
Accelerated process
Kooistra continues: "We are the only party in the North that offers this product. It is a standard FOM product, with an accelerated process. We can arrange it in as little as two weeks, during a short but powerful and well-covered process. Provided the company has its information in order, of course. We draw up a standard contract with good conditions. This export guarantee offers startups and scale-ups the opportunity to gain an accelerated international foothold.'
Directly accessible
Kooistra emphasizes, "We as FOM respond to market demands. That is why we have developed this product: there is a need for it. We are therefore open to questions and are happy to enter into discussions with organizations that want to work internationally or have already done so. The contact details of Klaas Kooistra and his counterpart Sybo Zijlstra are on the website, 'We can be reached directly. What we find important in contacting entrepreneurs? Building a relationship with each other and mutual trust. We now have 38 companies in our portfolio, among them are real pearls. We are very curious which pearls in export we may welcome!'
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