Growthstock Pulse Editorial
Watasumi is an environmental technology startup that designs systems to purify and process materials typically discarded or considered burdensome in industry, transforming them into valuable byproducts. According to CEO David Simpson, Watasumi’s vision extends beyond waste treatment: ‘We’re fundamentally transforming the concept of waste, redefining it as a valuable resource while building sustainable social systems. While targeting small and medium-sized food and beverage companies, the company has strategic expansion plans with a view to spreading its technology across Asia in the future.
Okinawa is an island prefecture with numerous inhabited islands, where labor shortages are particularly acute, and given the high dependence on tourism revenue, maintaining a beautiful natural environment is an extremely important economic issue. Furthermore, awamori distilleries and various food processing facilities are scattered throughout the islands, and appropriate and efficient waste treatment systems are essential for the sustainable development of these industries.
Watasumi’s modular system is groundbreaking technology that not only purifies waste but also generates energy in the process. This is particularly valuable in island regions with vulnerable energy supply infrastructure, as it enables energy self-sufficiency and can even create surplus energy when waste volumes are high.
A Massive Potential Market
The wastewater treatment market that Watasumi targets is a massive market worth tens of billions of dollars annually in the Asia-Pacific region alone. Wastewater treatment costs in the food and beverage industry represent a significant expense item, accounting for 5-30% of operating costs for many small and medium enterprises. While conventional treatment methods cost millions to tens of millions of yen annually, Watasumi’s system achieves economic viability with initial investment costs recoverable within 3-5 years.
Watasumi’s revenue consists of three pillars: equipment sales, maintenance services, and licensing fees. Equipment sales can generate revenues ranging from tens of millions to hundreds of millions of yen per system, while maintenance services secure ongoing revenue of approximately 15-20% of annual sales. Furthermore, in international expansion, the company adopts a technology licensing model, which can also generate royalty income from local partners.
Explaining the business model’s sustainability, Simpson notes,
Our technology, once implemented, has subscription-like business aspects that bring stable revenue over a long period of 15-20 years.
The company is currently applying for multiple patents related to processing technology and is strengthening intellectual property protection.
Watasumi has already established multiple strategic partnerships, and these relationships are accelerating the company’s growth. Collaboration with food manufacturers contributes to promoting ESG management through waste treatment cost reduction and environmental impact mitigation.
Particularly noteworthy are the compound benefits that the company’s technology brings to partner companies. Environmental impact reduction improves evaluation in corporate sustainability reports, significant cost reduction in processing improves profitability, and utilization of surplus energy enables the creation of new revenue sources.
Simpson adds,
Among our partner companies, there are cases where waste treatment costs have been reduced by 30% annually while generating additional value from the energy produced.
Watasumi’s distributed processing technology could serve as a powerful differentiating factor in environmental infrastructure development projects in developing countries. For example, various forms of collaboration are conceivable, such as participation in green finance projects promoted by international financial institutions like the Asian Development Bank, or technology provision in Official Development Assistance (ODA) projects.
Currently, Watasumi is actively seeking talent with diverse backgrounds for rapid business expansion. In technical fields, they seek engineers with expertise in biotechnology, chemical engineering, and environmental engineering; control system developers with electrical and electronic engineering backgrounds; and those with experience in product design and manufacturing process optimization. In non-technical fields, they seek sales personnel with experience in the food and chemical industries, international business development professionals, and personnel with project management skills.
Simpson continues,
While technical skills are important, we are above all seeking talent with a strong will to ‘change the world.’ We believe that innovation is born when people from diverse backgrounds come together.
The company’s corporate culture combines the learning orientation characteristic of R&D startups with a focus on developing practical solutions. The international workplace environment uses both English and Japanese as official languages, and work-life balance can be achieved by leveraging Okinawa’s geographical characteristics. In the rapidly growing environmental technology field, one can gain broad experience from technology development to commercialization and international expansion.
Simpson explains,
As we enter our fourth year since founding, especially in the international expansion phase, we expect members who join us going forward to play active roles as project leaders in various Asian countries and as founding members of local subsidiaries. We want to give excellent talent appropriate responsibility and authority, and together explore global markets.
From Researcher to Entrepreneur
Simpson is an American-born, British-raised researcher with extensive experience in environmental technology R&D. About 12-13 years ago, he moved to a university in Okinawa along with a professor from the University of Edinburgh to engage in practical research on environmental technology.
The catalyst for founding the company was participation in a project that utilized subsidies from the Okinawa Prefectural Government and national programs such as JST (Japan Science and Technology Agency) START to connect early-stage research results with industry. Through this project, he was able to verify the effectiveness of the technology in actual industrial settings and adjust the research direction to meet practical needs through collaboration with Mizuho Shuzo, known for awamori brewing.
Simpson says,
Technology that appears theoretically perfect in university laboratories often presents completely different challenges in actual industrial settings.
For Watasumi, it was important to demonstrate the true value of the technology in complex industrial ecosystems involving diverse stakeholders including actual customers, field operators, and wastewater treatment and waste management companies. Through this collaborative process, Watasumi’s technology evolved from mere research results to commercially viable solutions.
Currently, the company has actual commercial contracts with Japan’s northernmost distillery on Rishiri Island (Kamui Whisky) and a Sake brewery in Tochigi Prefecture. The Rishiri Island case presents particularly significant technical challenges, with operations in extremely cold environments, a three-month winter closure period, and the need to deal with snow and ice during system restart.
Simpson explains,
Rishiri Island is the most remote location from Okinawa, and through operational experience in harsh environments, our system has evolved to become more robust and reliable.
Photo by Kamui Whisky
The sake brewery in Tochigi provides custom services allowing customers to produce their own products, adopting a business model that includes participatory experiences in the manufacturing process and tourism elements. Through relationship building with such highly innovative customers, Watasumi’s technology has acquired versatility to respond to diverse industrial needs.
While multiple pilot projects are underway in Okinawa, several have not yet transitioned to formal commercial contracts. This delay reflects both Watasumi’s relative youth as a company and the traditional, risk-averse nature of the awamori industry.
Simpson says,
There is a cautious attitude within the industry regarding who will become the first adopting company.
On the other hand, demonstration experiments with tofu manufacturing, and other brewing industries continue, and Watasumi is pursuing gradual market development while balancing available management resources with technology development priorities.
Breaking Through Conventional Technology Limits with Innovative Solutions
Photo credit: Watasumi
Conventional high-concentration alcohol production generates significant organic waste consisting of decomposed rice, grains, yeast, and koji (Aspergillus oryzae) remaining after distillation.
Traditionally, this waste was reused as animal feed or organic compost. However, the modern livestock industry now demands consistent quality and dry conditions, making moist organic waste unsuitable—particularly in hot, humid climates like Okinawa where rapid decomposition occurs.
Current disposal methods involve spreading waste on land as low-quality fertilizer, requiring expensive outsourcing to specialized contractors. This approach is both costly and environmentally unsustainable long-term.
Reuse through composting is theoretically possible, but the capacity as a receptacle is shrinking annually due to decreasing farmland area and aging and declining numbers of agricultural workers. As a result, many brewing and distilling facilities currently adopt the method of simply spreading waste on land as low-quality fertilizer and irrigation water. This treatment method requires outsourcing everything from waste collection to spreading to specialized contractors, and being a labor-intensive process, it has become one of the most expensive waste treatment methods.
Simpson says,
This practice is widely seen in mainland Japan and Asian countries, but it is completely unsustainable in the long term, both in terms of cost and environment.
Watasumi’s breakthrough lies in its proprietary electrode technology combined with anaerobic bacterial processing. These special electrodes dramatically increase bacterial colonization area while promoting metabolic activity through electrochemical action. This innovation enables unmanned operation and delivers 70% power consumption reduction with 2.5 times processing capacity improvement—performance levels that conventional aeration systems cannot achieve.
Relatively large-scale factories and factories that have received administrative penalties for improper waste disposal in the past generally introduce treatment plants using aeration methods. This method sends air into water to promote organic matter decomposition by aerobic bacteria. While the water ultimately discharged is purified through this method, the vast amount of bacteria that proliferate in the process must be treated as new industrial waste, being disposed of through composting or incineration. This also consumes large amounts of energy and produces a lot of CO2 for waste transportation and treatment, resulting in high-cost processing.
The core of Watasumi’s innovative technology lies in efficient treatment methods utilizing anaerobic bacteria—microorganisms that thrive without oxygen and can process organic waste more efficiently than conventional aerobic systems. In this treatment system, wastewater is stirred in sealed large tanks, and anaerobic bacteria, not limited by oxygen supply, efficiently decompose organic matter. While based on this fundamental biotechnology, Watasumi has succeeded in developing systems that are dramatically smaller and more efficient than conventional ones by skillfully combining multiple biological processes and phenomena discovered during the research phase.
The most important technical advantage is the 24-hour automatic operation system that requires no field operators, significantly reducing plant operation and maintenance costs. While conventional aeration treatment requires consuming large amounts of electricity to send air into water to activate bacteria, Watasumi’s process features a design that does not require air supply systems.
Simpson says,
Air contains only about 20% oxygen, and the remaining 80% is essentially useless in the treatment process, yet all of it must be pumped in. Also, since there is a physical saturation point for the amount of air that can dissolve in water, the only way to increase treatment efficiency is to simply expand tank size, creating problems with capital investment costs and installation space.
In contrast, Watasumi’s system is freed from constraints on the amount of oxygen that can dissolve in water, with processing efficiency determined by the amount of bacteria and their metabolic activity.
Paradigm Shift to Distributed Processing
Credit: Secretariat, S.A. (2012 November 1). South Africa – eThekwini field trip on faecal sludge management.
Watasumi’s technology demonstrates maximum effectiveness particularly in high-concentration, high-strength waste treatment. Due to this fundamental characteristic, “distributed processing” – directly installing treatment equipment near waste generation sites – becomes the ideal deployment form. For example, by installing processing units within the premises of food processing plants or breweries, transportation costs for waste can be reduced while enabling the most efficient treatment.
In contrast, in centralized urban sewage systems that are mainstream in modern urban infrastructure, wastewater discharged from diverse sources is significantly diluted in the process of being collected at central treatment facilities through large-scale pipe networks, so by the time it arrives, it falls outside the concentration conditions where Watasumi’s technology can be effective.
Simpson explains,
From the 1960s to 1970s, discussions were held internationally to promote the introduction of distributed wastewater treatment in industry. If this approach had been adopted, massive investments in large-scale sewage infrastructure (large-diameter pipes, pumping facilities, etc.) would have been unnecessary, and water resource usage could have been significantly reduced. Unfortunately, however, priority was given to large-scale centralized municipal infrastructure development in policy decisions at that time, continuing to today.
This historical background provides important implications for the current situation in developing countries. While developed countries including Japan have sewage networks with very high coverage, in many developing countries such infrastructure exists only partially and fragmentarily. (In Japan, as of March 2024, the sewage system penetration rate is 81.0%, and as of March 2025, the wastewater treatment population coverage rate is 93.3%.)
Here emerges the new possibility of distributed processing that Watasumi proposes. Rather than aiming to develop large-scale centralized facilities requiring investments of tens of billions of dollars in developing countries, an approach focusing on introducing distributed processing facilities that are lower cost and more flexibly expandable could become an extremely attractive option from a sustainable development perspective.
This situation is similar to the past development process of telecommunications infrastructure. In many developing countries, mobile communication technology spread before nationwide fixed telephone network development was completed, realizing information society by “leapfrogging” over developed country-type fixed line infrastructure. Similarly, there is potential for distributed wastewater treatment systems to surpass and spread beyond conventional centralized systems, and Watasumi aims to play a part in this “leapfrog development.”
Global Strategy
Photo by Masaru Ikeda
Watasumi’s international expansion strategy is characterized by careful and steady progress. The company has held close consultations with international cooperation and trade promotion agencies such as JICA and JETRO, advancing its foothold in Asian countries. However, in international expansion, securing reliable partner companies in each region and pricing adapted to local economic conditions are key factors.
Simpson says,
Due to relatively high labor costs in manufacturing in Japan, especially Okinawa, simple export business models to countries like Thailand or Vietnam are economically difficult to establish.
Therefore, the company emphasizes building local manufacturing partnerships in each region. India in particular is attracting attention as a massive market where manufacturing development and environmental problem intensification are occurring simultaneously, and the company has already succeeded in securing partner companies capable of local introduction and sales channel development.
Simpson adds,
In countries undergoing rapid economic growth, environmental conservation measures are often postponed. Japan followed a similar path during its high economic growth period, ultimately facing serious pollution problems before environmental measures were implemented in earnest.
We want to learn from these historical lessons and support the introduction of sustainable environmental technology from the early stages of economic development so that emerging countries do not repeat the same mistakes. By doing so, it becomes possible to prevent environmental degradation accompanying economic development and the resulting health damage and deterioration of living environments.
In broader international expansion, the European market is also positioned as a promising target. Europe is an advanced region in environmental technology, with progress in efforts to improve the sustainability of industrial activities and social systems overall. Consumer awareness is also high, with extremely high sensitivity to the environmental impact of product production methods and raw material procurement, providing a foundation for accepting Watasumi’s environmental value proposition. The company is already building a foothold in European markets through research institutions in Budapest, Hungary.
The US market, particularly the West Coast region, is also being considered as a potential expansion destination due to technological advancement and high environmental awareness, but “the direction of environmental regulations and policies in the coming years is unclear, so we are currently carefully monitoring the situation,” says Simpson. However, as he holds US citizenship, he is positive about future North American expansion.
As a business model for international expansion, in addition to conventional equipment sales, utility-type service provision is also being considered. Rather than requiring initial investment from customers, this model allows Watasumi to retain equipment ownership while obtaining continuous revenue as license fees or service fees. This approach makes introduction possible even for small and medium enterprises with funding constraints, and utilization of funding mechanisms through collaboration with financial institutions such as banks can also be expected.
Funding Strategy for Sustainable Growth
Photo by Masaru Ikeda
One of the biggest challenges Watasumi faces as a startup is securing funds necessary for technology development and business expansion. The company has received debt-equity financing from the Okinawa Development Finance Corporation and Bank of Okinawa, and this funding has greatly contributed to establishing the company’s business foundation.
Simpson says,
Startups, especially hardware-based wastewater treatment technology development companies like ours, are positioned in extremely high-risk categories from investors’ perspectives. Generally, compared to IT and software ventures, initial investments are larger and the period until profitability is longer, so they are sometimes called ‘unsexy industries.’
Successfully securing funding from public financial institutions under such circumstances can be said to be proof that the company’s technological and social value has been publicly recognized.
From venture capital firms the company has contacted, the typical reaction is “while the concept and technical approach can be evaluated, we want to withhold investment decisions until multiple commercial customers exist who can confirm actual functionality.” If receiving investment at the current stage, investors would likely demand significant equity stakes as high risk premiums, and from the perspective of ensuring future corporate development and management autonomy, the founders and management team have adopted a strategy to avoid this at present.
Simpson explains,
Given the current business model and funding situation, unless we move to the next growth phase such as establishing new manufacturing bases, there is no need to rush additional large-scale fundraising for the time being.
Watasumi is currently in its fourth year since founding, transitioning its business stage from the research and development phase to the commercialization and market development phase. While establishing a business foundation in the Japanese domestic market remains the top priority for the immediate future, the company is looking toward both diversification of target industries and international expansion as its next growth strategy.
The company is exploring expansion of technology application scope from alcohol manufacturers such as awamori and sake to traditional food manufacturers such as soba and tofu, and further to food processing industries that discharge wastewater containing high fat content such as meat processing.
While these diverse industries may be small-scale individually, collectively they form a massive potential market. Watasumi’s efforts to provide innovative solutions to industrial waste problems through environmental technology play an important role in building a sustainable society, and their future development warrants attention.
