Armed with a fresh $43 million in investment funding—by far, the largest in the company’s eight-year history—Zionsville-based water management software firm 120Water says it is poised to take advantage of the huge opportunities it sees ahead.
The Series B funding round was led by a new investor in the company, Princeton, New Jersey-based Edison Partners. Existing investor Allos Ventures, which has offices in both Carmel and Cincinnati, also participated in the round.
To date, 120Water has raised a total of $57 million since its 2016 launch, said co-founder and CEO Megan Glover.
The additional funding, Glover said, will allow 120Water to pursue more opportunities. “This is a tipping point for the company and its shareholders.”
One such opportunity comes from the U.S. Environmental Protection Agency’s proposed Lead and Copper Rule Improvements. The proposal, which aims to prevent Americans’ exposure to lead in drinking water, would require water systems to inventory their lead pipes by Oct. 16 and to replace all of those pipes within 10 years.
Even though the use of lead pipes was banned in the 1980s, the EPA estimates that there remain more than nine million lead service lines still in use delivering water to families around the U.S.
The 120Water software platform allows water utilities to manage their data collection, testing, reporting and other aspects of water quality compliance.
Helping these utilities comply with the Lead and Copper Rule and other water quality standards represents a big business opportunity for 120Water, Glover said. “And so, 120Water’s kind of sitting in the driver’s seat of helping the state regulators, as well as all these water systems…comply with these new regulations, and quite frankly, do various compliance related activities that they’ve never had to do before.”
The company’s customers include about 5,500 water systems in 45 states, Glover said, which represents only about 1.5% of the country’s water systems.
Glover said the new investment will help 120Water amp up its sales and distribution efforts so that it can grow its customer base; and to improve and add new capabilities to its software platform.
Currently, 120Water has 75 employees, 60% of whom are local to the Indianapolis area and the other 40% remote employees who live around the country.
Edison General Partner Ryan Ziegler said 120Water’s business model, the traction the company has gained with customers and its growth opportunities make the company an attractive investment target.
“There are regulatory tailwinds and a multibillion-dollar addressable market [in water quality compliance] that really just started in the past couple of years, and you’re seeing that in the operating performance of 120Water,” Ziegler said. “So we feel there’s a clear line of sight to grow to a multiple of where they are today.”
And those growth opportunities are likely to remain in place for a long time, Ziegler said. Reducing lead exposure is an issue with bipartisan support, he said, and he believes the Lead and Copper Rule requirements will create momentum for other types of water quality testing.
“From our perspective, this is not going away. This is a multi-decade issue,” Ziegler said.
In connection with Edison Partners’ investment in 120Water, Ziegler has joined the company’s board of directors. Edison Partners typically invests in financial technology, health care IT and enterprise software companies outside of Silicon Valley with between $10 million and $30 million in annual revenue.
Though it is a new investor with 120Water, Edison Partners has made prior investments in the Indianapolis market.
Edison led or participated in multiple rounds of investment into Indianapolis-based marketing software company Sigstr Inc., both before and after Sigstr was acquired by Atlanta-based Terminus Software Inc. in 2019.
In 2019, Edison led a $15 million round of investment into Fishers-based employee-engagement software firm Emplify Inc. Then, in 2021, Emplify was acquired by San Francisco-based 15Five Inc. for $50 million.