Karen Schuett Struck Entrepreneurial Gold in the Most Unlikely of Places
The journey from idea to IPO is a difficult one. In this five-part series, we look at how founders scaled their startups and reached new milestones.
It started with pigs. Or, more accurately, the “manure lagoon” they created on an Alberta hog farm. In search of help for this football field–sized problem, the local farmer reached out to Karen Schuett, who was running a water treatment business focused on groundwater that had been contaminated with hydrocarbons—organic chemicals found in oil, natural gas and coal.
This wasn’t the first time someone had contacted her with a longshot ask; Schuett regularly worked on water decontamination projects at gas stations, airports and rail yards around the world. It was the first time, however, that a cold inquiry led to a pivot in the business itself.
“It seemed like a simple move from diesel and hydrocarbon contamination over to manure waste,” says Schuett. “But we quickly found out it wasn’t—there was just nothing on the market to help with manure waste.”
Within months, she and her partners had launched a new company, Livestock Water Recycling (LWR), and were on the path to sustained, global growth—but it would take a decade of hard work to get there. “As far as just scaling a business in Canada, there’s a lot of barriers,” Schuett says.
Building a business case
Water treatment is about filtration. The goal is to separate organic particles from clean water—often by using chemicals that cause these impurities to either float or sink—where they can be removed. Here’s where it gets complicated: dealing with various types of waste requires vastly different chemical treatments and physical processes, and there wasn’t a protocol to deal with manure. (The high nutrient load in manure makes it particularly complicated to deal with.) The LWR team began experimenting with their existing equipment and techniques. As soon as they saw some success, Schuett knew they had a strong business case for creating a more effective approach and she set about learning everything she could about manure.
It’s that resourcefulness that most impressed Michael Madsen, an executive in residence at MaRS, an innovation hub in Toronto. As one of Schuett’s mentors in MaRS Momentum, a program that supports high-potential ventures, he’s working to help LWR scale globally.
“To grow a company, you need to articulate the customer’s problem, and then represent yourself as a subject matter expert who can solve it,” Madsen says. “Karen is so good at that. She is extremely focused and creative, and she has intellectual curiosity about the problems facing beef and pork producers. She really, really understands their business.”
Finding the value proposition
Establishing the business case was the easy part. Even developing the technology wasn’t that difficult. Learning the ins and outs of an unfamiliar industry and convincing farmers to try something new, though? That was a much bigger challenge.
“It’s hard to bring a new way of doing things into a very old, well-established market. Some farming families have been on their land for 100 years—they know what they’re doing,” Schuett says. “This wasn’t an inefficient system that we were trying to fix; they were being very efficient about it and being as economical as possible.”
Through conversations with hundreds of farmers, she realized the company’s value proposition wasn’t just about cleaning up manure. It was in their ability to create new revenue streams for their customers. As every backyard gardener knows, manure is a great fertilizer. Once LWR filters the waste out of the lagoon, farmers can sell the processed manure as two distinct fertilizer products. Some of the company’s clients are also selling their manure as feedstock for biogas, an alternate energy source that is produced by fermenting organic matter. Farmers even reported fringe benefits, such as healthier herds, increased pregnancy rates and reduced antibiotic use.
LWR also helps farms become more environmentally sustainable. According to a study in Global Change Biology, “livestock manure management accounts for almost 10 per cent of greenhouse gas emissions from agriculture globally,” most of that from manure lagoons. LWR’s technology can cut these emissions by 50 to 82 per cent, Schuett says. What’s more, only 4 per cent of the world’s water supply is currently reused. LWR is aiming to recycle a trillion gallons of manure into reusable water and bio-fertilizers by 2030.
Looking to scale
Businesses in capital-heavy markets like water treatment take a while to get off the ground. Even with all of its benefits—and the global expansion of livestock farming in response to rising demand for meat—it took years for LWR to see real traction. Then, right before the pandemic, a variety of market forces combined to supercharge the company’s growth. Just about every country in the world became interested in renewable fuel sources; the U.S., in particular, began pushing biogas. Fertilizer prices also soared, which made the possibility of selling their manure even more enticing to farmers.
It was around this time Schuett decided to seek help from MaRS and its Momentum program. At first, Schuett’s focus was simply on gaining access to new networks and becoming more established as a player in the cleantech industry.
“There’s a real access-to-capital and access-to-market issue in Canada,” she says. “We wanted to grow assertively, which meant raising capital, but we didn’t have a network of investors.”
Momentum matched Schuett with experienced entrepreneurs who specialize in everything from marketing to funding to human resources. This curated team provides her with warm introductions to their networks and offers concrete advice about scaling a company internationally.
“Having a resource where people can tell you what worked for them makes you feel supported and much less alone on your journey,” Schuett says. “You’re not floundering around looking at an opaque future, but really making a clear path forward.”
With increased global demand, the company has tripled its revenue and almost doubled its number of employees. Schuett says Momentum’s help has been invaluable as LWR looks to its next phase, which focuses on Europe, the Middle East and Asia. Her mentors have been helping her prepare for a $20-million equity round, which will be used for developing these new markets and launching new products. The company projects this will allow it to double revenue each year for the next three years to achieve 30 per cent market penetration.
LWR has started building a revenue model that could transform the dairy industry. There are even predictions that manure could become more valuable to farmers than milk. “This new profit dynamic has the potential to make the industry more economically and environmentally robust,” says Schuett. It’s an unexpected twist, but Schuett is finding a way to spin manure into gold.
MaRS Momentum program works with high-growth Canadian companies to accelerate their path to hitting $100 million in revenue. Is your business Canada’s next anchor company? Find out more and apply to join the program.