Is The Tap Turned On For Water Investment Yet?


The flood gates are opening up for water technology investments, the Wall Street Journal says this morning. Calling the water industry “one of the hottest areas for investors,” the article says that while investors struggled to fund water technology in the past, concerns over water supplies, contamination and aging infrastructure are now driving a funding boost. Missing from the article is a good look at how investors still seem to be struggling to figure out how to invest in complex technologies and develop business models.

The WSJ’s bullish water story sent us back to a report issued by the Cleantech Network, where a round table of investors discussed some of the problems they’ve faced when determining where to place a water bet. Stephan Dolezalek, managing director of VantagePoint Venture Partners, says in that report:

“We certainly have come to a perspective which I’ve heard echoed time and time again that says ‘We keep looking at water deals, we keep getting closer to pulling the trigger, but we haven’t yet made that first water investment.’…There hasn’t been a particularly elegant solution to some of these very tricky problems.”

Jeff Lipton, managing director and head of North American cleantech investment banking at Jefferies & Co., says:

“I think water is an area of tremendous interest among both public and private investors. I think people continue to struggle with finding opportunities that they can invest in and participate in…I think that people have a hard time determining what the business model is and how companies will make money.”

Heinz Haller, corporate vice president of strategic development and new ventures for Dow Chemical (DOW), which does substantial business in water technology, says:

“It’s very complex…It was a utility play, but I think it’s going to be much more of a technology play.”

What are your thoughts in investments in water technology? Has there been a noticeable shift, or are investors still struggling?


adam bronson

The observation of new water technology versus simply more water is a pointed one.

Since 1959 when Reverse Osmosis was invented, there has been no substantial technological innovations to it. Yes, membranes have improved with the growth in the research and development of synthetics, but the RO system today is the same fundamentally as it was all those years ago.

Except this is not true, because there is a new RO system which generates 30-50% energy savings and extends membrane life by 3-4 times (not something membrane manufacturers will want to hear. Stay tuned (and you heard it first, right here!).


Robert Steiner


Great pick-up and reference to the roundtable discussion. WSJ performs a good analysis, but makes a characteristically similar leap that most have been making as of late from “huge market need and global trends” to “safe investment and tremendous opportunity.” Unfortunately it’s not that easy and straightforward. The discussion needs to be focused not on any particular technology, but finding the right team to commercialize it, the right investors to open doors to customers, and the right strategies to convince the big players to adopt and scale a new technology. This requires a very specific, experienced VC/PE team more than just a compelling technology play. While I am witnessing VC/PE firms increasing their water technology exposure and acquiring more water expertise and experience at their management levels (not just advisory boards!), the barrier still remains high. Thanks again for posting and soliciting comments.


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