Do you have some money you want to invest, but you feel frustrated because the “traditional” investing options are so unattractive these days? If so, I’ve got two words for you: Horse manure.
While you might turn up your nose at the idea of putting your money in horse manure, a new venture wants you to believe that the smell you should be thinking about is the smell of money. Or, in other words: How does a return of 526 percent at 5 years sound to you?
Now that I have your attention, let me shed some light on what seems to be one of the most creative waste-to-money ideas I’ve seen lately – The Horse Poo Bank. The idea behind this British venture is very simple – there are 6 million horses in Europe alone, generating more than 47 million tons of manure a year. This manure can be a real headache for horse owners, not to mention the costs involved in properly removing it. Nevertheless, manure can be converted into a great compost and even generate clean energy.
I don’t know where and when the (unknown) entrepreneurs behind the Horse Poo Bank had their aha moment, but they managed to connect the dots – you have here a never-ending raw material that you can basically get for free and convert into valuable products. All you need to do is to figure out how to efficiently convert this waste into gold. I’m sure even Michael Porter would acknowledge the shared value that can be created here.
The devil is always in the details, so first you wonder how much of a problem horse manure really is. According to the bank, it’s a difficult problem, combining hard work, risks and costs. Picking it up, the bank’s website explains, is a heavy task and so is storing it. Horse manure may also cause direct ground/water/air pollution and you also need to comply with environmental regulation, which means more costs and risks. Finally, the removal is costly and usually inefficient.
And what if the horse owner wants to generate cash from the manure without a middleman? That’s unlikely, the bank explains, as these attempts are usually inefficient and require costly investment. Looking at the figures, the most realistic solution for horse owners is to work with the bank, it concludes.
The figures certainly look attractive. The potential value back the bank offers per horse per year is EUR 4,450 (Euro), including EUR 2,400 for free “cleaning service,” EUR 250 recycling “cash-back” and EUR 1,500 exceptional return. To generate such an impressive value the horse owner would need, of course, to invest first, anywhere from EUR 50 to EUR 1,000 (the figures above seem to coincide with a EUR 1,000 investment).
Even if you don’t have a horse, the bank generously offers you the opportunity to join as an investor, promising that not only you will enjoy a high and quick return, but you also “will be part of the future, supporting clean solutions for the climate together with breakthrough technologies in modern energies, ‘green’ chemicals and nutrients.”
Before you get too excited, I suggest you hold your horses and conduct a proper due diligence of this offer first. Looking at the bank’s website, I have a feeling it might turn out to be as promising as the latest email you just received from the only son of the former president of Liberia, asking you to help him with the $600 million he has in his possession in return for a nice fee.
No matter how real the Horse Poo Bank is, the concept behind it certainly seems to make sense, at least in terms of making something valuable out of horse manure. After all, an average horse does indeed produce about eight tons of manure a year, and the question is what to do with it. “Unless it’s properly managed, horse manure can pose risks to the environment and to health,” says Virginia Cooperative Extension agent Carrie Swanson. And it also poses a financial risk – the Boston Globe reported in August that the Suffolk Downs racetrack has been fined $1.25 million for discharging horse manure, urine and pollutants into tributaries of the Boston Harbor.
On the other hand, the opportunities also seem to be clear – first, as Dr. Michael Westndorf writes in his 2004 paper, Horses and Manure, “When managed properly, manure can be a valuable resource on a farm. Manure can be a source of nutrients for crop production and can improve soil quality.” Second, it can generate energy. Last February, the city officials of Norco, CA, decided to move forward with plans to build a manure-to-energy facility, after Chevron presented them with a study showing that processing horse manure-to-energy could be worth roughly $7.3 million over the next two decades.
Even if the Horse Poo Bank is still a pipe dream, it might still be a great business idea. I would even consider offering it to Mitt Romney’s campaign as an example Romney can use for what a green innovation based on free enterprise and independent of government support looks like. Who knows, he might even like to invest in it.
Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the New School, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.