We rarely cover companies just starting to gain traction with investors and traders in terms of liquidity and volume, but it is sometimes worth the effort, as we believe it likely is today as we take a close look at Eco Innovation Group, Inc. (OTCMKTS:ECOX).
The important point here is that the stock is rapidly garnering new attention after making a big splash with a new open letter to shareholders that gave a great deal of insight into its new model and vision for the future.
The vision expressed by the company as it revealed itself to the world last week in detail for the first time is one that should be extremely interesting for ESG growth investors in particular – or perhaps for people who just like strong stories with interesting business models and enormous built-in upside potential.
The key here that unlocks this discussion is that ECOX is an incubation platform for commercializing eco-oriented innovations and inventions. That model is unique – as far as we have seen – in the eco-oriented space. This is a bit like a publicly ESG VC model.
What is ESG
As Eco Innovation Group, Inc. (OTCMKTS:ECOX) outlined in its shareholder letter, ESG is generally understood to refer to investment capital being driven by considerations of environmental, social, and governance factors alongside financial factors in the investment decision-making process – Morgan Stanley researchers believe ESG investing may drive as much as $57 trillion in capital flows over the next ten years.
ECOX also noted that this designation or alignment may also earn some of its product launches favorable treatment including special grant funding or tax credits as governments and private foundations seek to incentivize innovations that help the environment.
For what its worth, the reason Morgan Stanley nails its estimate down at $57 trillion over the next ten years is due to a combination of data points associated with the so-called “millennials” generation:
- 84% of millennials state that they plan to make investment decisions based on ESG concerns, and
- Millennials are lined up to inherit $68 trillion in wealth over the coming 10 years.
If you factor it out and add it up, you get to $57 trillion potentially flowing into this space over that period.
What ECOX has Lined Up
Now you can see this company as something like a Silicon Valley VC with an emphasis on eco-solutions and a coming stream of capital flows from ESG funds.
But we see it as a repository for really interesting and productive ideas. The main reason we see that picture is because of the quality of the two ideas the company already put out into the public sphere as it discussed its initial product launches on the near horizon.
“Our first initiative resulted in an exclusive global licensing agreement with the Bellagio IP Trust for the ECOX Power Booster™, which is a remarkable innovation that taps electricity and magnetism to increase the useful power derived from a given amount of energy. Customers using this technology may be able to increase the usable energy in their homes by as much as 150% while saving approximately 60% on their electric bills.”
In other words, the two most important factors in efficiency in energy deployment in the world – saving money and boosting energy output – are implicit in the idea. That has huge implications for both the consumer and the planet.
“Another remarkable innovation now in our pipeline is called PoolCooled™, which utilizes proprietary technology to cool your home or building by taking cool water from an existing swimming pool and looping it through the existing air conditioning systems to boost air conditioning efficiency on a per-unit power consumption basis in the home or building. Based on available information, we believe this technology may yield savings of as much as 50% off residential electric bills. And because the energy transfer occurs, the process also warms the swimming pool with no additional power usage or cost. PoolCooled™ is designed for hotels, motels and apartment buildings, or for use with your own back yard swimming pool.”
This is also an extremely interesting idea that really leverages an overlooked energy transfer opportunity. Heat is stored up in the house, not in the pool. Transfer it from the house to the pool, and you save power, cool the house, and heat the pool, all at once. And it can apply to hotels, motels, and apartment buildings.
The company’s ability to convince the market that it has commercial rights to these ideas is really the only major hurdle in this model. However, that may already be in place given that it stated the following in the shareholder letter: “Our product licensing agreements provide us with the rights to leverage existing product development and intellectual property, and then commercialize, market and sell these products. Our success depends on the quality of ideas we cultivate in our discovery process, our development and execution incubating products and our go-to-market strategy.”
We would also note other references Eco Innovation Group, Inc. (OTCMKTS:ECOX) has made to exclusive global licensing rights agreements.