AMDP Investment Proposal - Pathwater

To: Clark Hansen, CEO, AMDP
From: Baylor Adams, Research & Development Analyst Date: March 15, 2021
Subject: Investment Recommendation Memo - Pathwater

Per the Anima Mundi Development Partners investment strategy, our firm mission is to identify and invest in forward-looking businesses that prioritize corporate social responsibility and environmental sustainability while returning a profit. It is my responsibility to provide attractive investment research and opportunities for sustainable growth and returns. I have identified a great opportunity to invest with Pathwater, a new water bottle company whose goal is to eliminate single-use plastic water bottles by providing consumers with a new product: refillable aluminum-bottled water.

AMDP Strategy

Pathwater aligns with our firm's investment strategy in its attention to our values defined below:

1: Triple Bottom Line: a big picture environment-focused concept that calls on the three P's: people, planet, and profit. This brings attention to a firm's impact on their greater community and what they're doing to bring value to the world.

2: Corporate Social Responsibility: this addition to a business model asks a firm what they're doing to improve society and how they can better orient their values through philanthropy, volunteering, or other outward-looking initiatives.

3: Social Enterprise: a company that creates positive change through its products, improving the overall social capital in the world.

4: Carbon Footprint: an output of any form of production that negatively affects the climate, usually measured in the form of carbon dioxide emissions.

Eliminating Single-Use Plastics

Pathwater was founded in 2015 by Shadi Bakour and Ali Orabi, Silicon Valley entrepreneurs who used to drink water from plastic bottles. Following the statistic that the average person consumes 148 plastic bottles of water per year, the company set off to disrupt the water bottle industry. As one of the only major companies to fill their water in a reusable aluminum bottle, Pathwater is encouraging people to stop buying more bottles and reuse their Pathwater bottles. Pathwater's mission is to provide its customers with an alternative to single-use plastic water bottles. Their aluminum bottles are sustainable and encourage buyers to reduce their disposable bottle consumption and reuse a sleek metal bottle.

The most important part of Pathwater's business plan is that it is still competitive with other water brands. It’s not nearly as expensive as other metal bottle competitors like Hydro Flask, with prices upwards of $60 for a metal canteen. If you visit a gas station to buy water, most people expect to spend around $1-2 on a large bottle of water. Priced just under $3, Pathwater is a similar option that takes the best parts of inexpensive bottles and sturdy metal bottles, meaning you won't have to buy any more bottles in the future for a refreshing eco-conscious water experience. Thirsty customers can order a 9- pack from the Pathwater website for $20, meaning you'll have plenty of reusable bottles to use in the future.

A Path to Success

Pathwater encountered a number of issues in its initial years. After a fundraising round from family and friends and deciding who their manufacturers would be, Bakour and Orabi hit a roadblock when 20% of their product came out "tasting like tea" (Boerner). The entrepreneurs were forced to design their own facility in Fremont, CA, where the bottles are still being produced today.

Pathwater has experienced significant growth since the hurdles in its first year of production. According to a BizJournal statistic, Pathwater's year-over-year growth in 2018 was in excess of 300% and the company received investments from celebrities like Guy Fieri and Vernon Davis. According to GrowJo, Pathwater reached over $12.7 million in revenue in 2020.

Goodbye Plastic

More companies and organizations are acting to end the use of plastic water bottles. In August 2019, the San Francisco International Airport (SFO) told restaurants and retailers they could no longer sell plastic water bottles (Wida). Instead, the airport installed more than 100 hydration stations to provide travelers with easy access to water. In December 2019, financial services giant Intuit pledged to offer Pathwater at all of its offices as an alternative to single-use plastic water bottles (Pathwater). This trend could likely reach most major corporations and puts Pathwater on an avenue to success.

A Pledge to Improve

Pathwater continues to grow profitably and contribute in more ways to the world. The company has released a number of limited-edition bottles, stimulating continued buyer interest in their bottles. Examples of these unique promotional batches include Earth Day bottles in 2020 featuring a green bottle and a Made in USA bottle with an American bald eagle design. In both of these bottle campaigns, Pathwater donated 100% of purchase proceeds to their nonprofit partners; for the Earth Day bottle, these included the National Forest Foundation, Make-A-Wish, Oxygen Seven, Karmagawa, and 5 Gyres Institute and the Made in USA bottle to Direct Relief (BevNet).

Pathwater has a greater impact on the world than just charitable donations. Pathwater uses aluminum as its bottle composite because aluminum is the only material that offers 100% endless recyclability (Pathwater). Pathwater has calculated that after three refilled uses of its bottle a consumer's purchase becomes carbon neutral. After four uses, the bottle is benefitting the planet.

Analyst Recommendation

Pathwater will be a profitable investment because it is improving the social capital of the world by substituting aluminum for plastic. Consumers will be quick to catch on to this growing business. Social enterprises like Intuit are looking for ways to improve their public images and give their employees sustainable perks. Corporate sponsorship with major brand names is expected to continue: companies like Facebook, Rhude, Adidas, and Napa Farms Market have partnered with Pathwater to create custom labeled bottles (Pathwater).

As Pathwater continues to gain social recognition and become popular, more consumers will want to be part of their mission and help end the consumption of single-use plastic water bottles. Pathwater is a great investment opportunity for AMDP and aligns with our values of environmental sustainability and socially responsible enterprises. I highly recommend that AMDP joins the Pathwater movement to help better the world with refillable water bottles and continued hydration.

Works Cited:

Beverage Industry. “PATHWATER Debuts Refillable Aluminum Bottles.” Beverage Industry RSS, Beverage Industry, 10 Mar. 2020, www.bevindustry.com/articles/92884-pathwater-debuts-refillable-aluminum- bottles.

BevNet. Pathwater Unveils Limited-Edition Earth Day Bottle, BevNET.com, 24 Apr. 2020, www.bevnet.com/news/2020/pathwater-unveils-limited-edition-earth-day- bottle/.

Boerner, Dean. Fremont Entrepreneurs' Water Bottle Company Almost Tanked before Deluge of Sales, Bizjournals.com, 4 Apr. 2019, www.bizjournals.com/sanfrancisco/news/2019/04/04/pathwater-recycle- bottles.html?s=print.

Golf Course Industry. “Hawaii Course Says ‘Aloha’ to Plastic Water Bottles.” Golf Course Industry, Golf Course Industry, 18 Feb. 2020, www.golfcourseindustry.com/article/princeville-makai-golf-plastic-bottles/.

Growjo. PathWater Competitors, Revenue, Alternatives and Pricing, 2021, growjo.com/company/PathWater.

Pathwater. Made In USA: Pathwater Launches New Bottle Benefitting Direct Relief, PRNewswire, 26 May 2020, www.prnewswire.com/news-releases/made-in-usa- pathwater-launches-new-bottle-benefitting-direct-relief-301063958.html.

Pathwater. PATHWATER to Replace Single-Use Plastic Bottled Water at Intuit, PRNewswire, 10 Dec. 2019, www.prnewswire.com/news-releases/pathwater-to- replace-single-use-plastic-bottled-water-at-intuit-300971950.html.

Real Leaders. Pathwater, Real Leaders, 12 Jan. 2021, real-leaders.com/pathwater/.

Water, Path. “Partnering to Save the Planet with the BEST Bottled Water.” PathWater, PathWater, 25 Dec. 2019, drinkpathwater.com/blogs/news/partnering-to-save- the-planet-with-the-best-bottled-water.

Wida, Erica Chayes. This Major US Airport Just Became the 1st to Ban Plastic Water Bottles, TODAY.com, 20 Aug. 2019, www.today.com/food/san-francisco-airport- becomes-1st-ban-plastic-water-bottles-will-t160125.