It was around September, it was pretty hot in Madrid and I was a in a hurry. I arrived at the building where AUARA has its headquarters a couple of minutes late and feeling a bit nervous, as every newbie pursuing new adventures does. After years of studying engineering, this time, I had to be a journalist.
AUARA is the first Startup of the week in Ambitious Tracks, and probably because of that, I’ll remember it with special affection.
I entered the office that they share with other companies, a NGO among them. I met part of the team and they took me to the meeting room where, not to say that the tailor’s wife is the worst clad, they offered me a bottle of AUARA.
There I met Antonio (co-founder, CEO and interviewee) and they showed a video about what AUARA is and their mission.
But… before going deeper: What is AUARA? To contextualise the rest of the interview and in few words AUARA is a social enterprise that sells bottled mineral water and whose profits are used to support projects that bring water to those that don’t have it.
Their slogan is powerful and straight to the point: YOU DRINK, OTHERS DRINK.
If you want to go straight to the point, just click the icons below.
Who is behind AUARA?
There is no better way to understand the core of a startup than getting to know their founders, so here we go.
Pablo is 26 years old and studied industrial engineering in “Polytechnic University of Madrid”.
He met Antonio at school, once he arrived in Madrid. When Antonio was 10 years old, he had already lived in Bolivia and Brazil. Later, he studied architecture, a task that he combined with several volunteering projects abroad.
In the first month, they contacted Luis, a friend of Antonio’s father, to ask for some help with the business plan of AUARA. In his fifties and with a long career in the field of start-ups valuation, he decided to join those young guys in this beautiful and challenging project. In the words of Antonio: “Luis came here to provide the grey hair to the group :)”.
The idea and its WHY
It’s always difficult to find the seed from which a startup grows, but in this case, it seems there was a first experience that triggered the process.
Antonio was doing a volunteering program in Ethiopia with the NGO “Amigos de Silva” (Silva’s friends), helping to build a hospital in the Afar region, one of the poorest of the country. It was there, where he saw clearly that the root of so many problems was the dirty water they were drinking or even worse, the lack of it.
“When you see someone coming with a gangrenous leg that must be amputated, because that person didn’t have clean water to wash it, you see so many things crystal clear.”
It was in this moment when he saw that it was necessary to do something about the issue of water.
With that thought in mind and while having a couple of drinks with his friends back in Madrid (Pablo among them), they started talking about the topic and came up with the idea. Pablo was already collaborating at a social enterprise, so they thought about building one themselves.
What could be the product offered? After some brainstorming they saw it clearly: water from here that funds there.
From that moment they started working and developing the project.
It took them two months to come up with the name AUARA. It’s a term coming from Amariko (spoken in Ethiopia) which means desert storm.
“In a desert storm what you desire most in the whole world is a simple bottle of water and the phonetics helped too”. (AUARA’s phonetics are similar to water in Spanish, agua).
When asked about the WHY of AUARA, Antonio answered in a way that made me see how big the project was and how far they were going to go.
“If I was creating my own brand of beverages like anyone who starts something to make money, I would have quit a long time ago. It took us 2 and a half years to sell the first bottle. We fought and worked ourselves to death for the purpose of this project, the social purpose of all this. It’s a human mission”.
In compliance with their mission, the founders decided they wouldn’t make a single Euro until they have a positive EBITDA. They also made another thing very clear, that the focus is as much on the social part as it is on the environmental impact of all this.
“We are the first company that produces exclusively with 100% recycled plastic. We love innovation, in the environmental and social sense. Both things are different sides of the same coin”.
About the process, how do you create all this?
Let’s make this section more appealing through an infographic with some of the milestones (green) and problems (red) that AUARA has found on the way.
And if you prefer a video (in spanish) take a look at this one with the main milestones of 2016.
And the money… where does it come from?
Before trying to get funds, they asked themselves an important question: what kind of company do we want to be? Are we donating part of the profits or all of them?
Finally they decided they would donate all the profits, which could be a disadvantage in order to get funds.
The first round, held in July 2015, was the typical FFF (family, friends and fools). In exchange, they gave shares with a buy-back arrangement and a very friendly interest rate. Here, they got the first 50.000€.
In November 2015, they had a second round of funding, this time through a financial advising company.
“They liked the project and decided to present it to their clients. Although it is an atypical investment product, we did very well. There are more and more people interested in making a social investment with a real impact.”
The funding was as a participating loan with an interest rate of 8% (quite below what the market offered, between 16 and 20%) and they manage to get 300.000€ of funding.
“We didn’t want to have more investors and dilute the capital. We want to control the social purpose of this in the long term. We hope not to get in other funding rounds and keep working with the cash flow that we are generating.”
How is AUARA promoted?
How do they show this project to larger audiences? Their main marketing is through interviews in the press. Moreover they have a strong presence in the main social networks.
“We don’t pay for articles. Radios and newspapers are very interested in our story. In social networks we are betting big on Facebook.”
With respect to reaching retailers, they have still some constraints, but they don’t lack optimism!
“Reputation really matters in Spain. That’s the reason why it’s still difficult for us to seduce large companies with a conservative mentality. However, we think it’s a matter of time. Sooner or later we’ll get there, we‘re already talking with some large supermarkets.”
They are also selling in bars and restaurants with a good image to create more brand awareness and therefore be able to seduce the big players. To convince these small establishments, they have created the label “AUARA ambassador”, awarded to those who sell a specific number of AUARA bottles.
“Being a social enterprise has helped us reach some restaurants and bars that join the cause and are sure that their customers will value a product with a purpose beyond the mere economic profit.”
Still, the rivalry is tough. The big brands have prices that, nowadays, are impossible to be matched by AUARA.
“The strategy of the big beer producers is to have a brand of water. They sell their water very cheap in order to avoid giving discounts on the flagship products.
Those low prices, around 0.20 € per bottle, made many restaurateurs back out when we offer our bottles for 0.45€. They have very tight margins too so it’s an understandable reaction.”
In September 2016, AUARA reached a fundamental milestone. They started selling in the supermarkets of “El Corte Inglés” and in its online store, this being the first large retailer in which their product is available.
Later, they started selling online in SLOW LOVE, Sara Carbonero’s online store, getting more and more brand awareness (Sara Carbonero is a famous celebrity in Spain).
Economic and environmental sustainability
Undoubtedly this team doesn’t think small, so my next question was obvious. Did you already think about expansion?
As Antonio told me, they have been thinking about exporting, but only to countries with no water.
“We are aware that water transportation has an important environmental impact, that’s why we operate with local businesses. We were asked water by United Arab Emirates.
We might export to these kinds of countries, but exporting to a country with its own water doesn’t make sense for us, it’s not environmentally sustainable.
We could think about taking the brand AUARA to other countries, but always with local resources and springs.”
To my question about receiving economic advantages from suppliers due to the social purpose of AUARA, Antonio made it clear.
“We don’t get any discount and we don’t want to. To be sustainable in the long term, we can’t work subsidised. We want all suppliers to make their money to ensure the future stability of AUARA. Moreover, experience says that when someone works for free, the job doesn’t have the same quality. There are priorities, which is totally understandable.
We do think that we should have some tax benefits.”
Social problems aren’t the only ones that keep AUARA awake at night. They think, a lot, about the environmental problems.
“For 2020 we have to get rid of the plastic in the bottles. There are already some companies that are studying biodegradable materials to manufacture recipients. It will take time for these solutions to reach the mass market but we are following closely many lines of research regarding this topic.”
About the future and next challenges
“The main challenge is to increase our brand awareness and show people what we do. Spanish people are cautious due to many atrocities we have seen, like fake NGOs and corruption at different levels. There is mistrust, that’s a fact. That’s the reason why we are providing as much transparency as we can.
One of the moves was the QR code that you can see on each bottle and that after scanning it, directs you to the project that will be funded with the profits of that bottle.”
“Moreover, we are the first Spanish company to get the Social Enterprise certificate, which audits and certifies social enterprises. We want to give security and transparency to the customer”.
Although they have a long term vision, they go step by step and follow carefully the monthly targets.
“Water is a very seasonal product. We’ll get stuck in winter and start growing again in spring. In April we are planning to launch new formats and other innovative products related to water. It’s going to be something completely new in the food sector and that’s all I can say :)”
“For 2020 we have a clear target. We want to positively impact the life of 50.000 people with an investment of around 2.5 million euros.”
Any advice to other entrepreneurs?
“If I had to give an advice, especially to social entrepreneurs, it would be to think big and be ambitious. We have realised that the social entrepreneur thinks on a small and local scale, since it isn’t easy to get funding.
They don’t try to compete with the big brands, sometimes the fair price is not enough, the product isn’t that good and it’s expensive. We have to compete face to face with the big players and with great products. We don’t have to think small just because we are a social enterprise.”
Another piece of advice that Antonio gave me, or better said, a virtue to enhance, is patience.
“We have been many months walking through the desert… industrial issues take time and sometimes you think about quitting.
But it’s in some small moments, like when we received a picture of the first well in Benin, when you realise the impact of all this and why it’s worth the effort.”
After one and a half hours, we finished the interview. On my way home, I had time to think and feel several things.
The first one was: I strongly think that I have learnt more about how the entrepreneurial world works in this interview than in one year of university.
The second thing I felt was a feeling of calm. Calm in the sense that there are more and more people seeing beyond the economic figures and trying to make this world a better place for everyone.
And the third was a feeling of gratitude. Gratitude towards this great team that with this interview it kept me being an optimist about what will come in the future.
Thanks for everything AUARA!
And that’s all for now. Next week’s “STARTUP OF THE WEEK” is C21 BE BRAVE! They are ambitious and have made a thing very clear. They want to leave a mark!
The interview is veeery interesting. I promise! If you don’t want to miss it, follow us in our social networks or better yet, sign up below!
Please promote this interview with your friends to help this beautiful project reach more people! Thanks so much in advance and see you next week!