Envisioning a World Just Emerging into Sight

“Vision is the art of seeing what is invisible to others,” wrote Jonathan Swift. Venture capitalists know that seeing trends before other investors do is the secret to great venture investments.

For water investors today, the bottom line is a dearth of obvious choices—high multiples where the potential is obvious, and a great deal of due diligence to find a well-structured investment at a reasonable multiple. Historically, the water industry has been consolidated, dominated by a small group of large equipment manufacturers focusing on niche industrial markets and a conservative, slow-moving municipal market. Not surprisingly, less than 5% of cleantech investments have been in water to date, according to the Cleantech Network.

A triple threat, which combines water scarcity with climate change and a decaying water infrastructure, is changing today’s market with remarkable speed.

The commercial demand for innovative technology that delivers, treats, stores or monitors water is a rare example of great need not predicted by historic industry activity, making this opportunity invisible to many potential investors. The next 18 months in particular offer an opportunity for windfall investment returns on water management solutions. This 60 page Water Matters report examines and probes these three threats in detail and provides timely insightful analysis about innovative water technologies, identifies key early mover U.S. markets, companies and investment opportunities.

Water is reaching a critical level of scarcity that has begun to affect business and even populations in the richest countries. By 2025, water scarcity will be a basic fact of life in much of the developed world. Over the next decade, climate change will introduce at least a dozen new forces impacting the supply of water, from increased evapotranspiration to reduced snow fall.

Finally, the infrastructure that delivers clean water and disposes of sewage will continue to decay faster than the U.S. can fix it. Sewage pipe and storm water collection systems fail on a daily basis, stopping business and creating significant health hazards. The U.S. EPA estimates that there are as many as 73,000 sewer spills in America every year. These accidental spills can send large volumes of untreated sewage into rivers and beaches.

Water scarcity, climate change and the decay of water infrastructure are creating a triple threat that investment banks such as JP Morgan identify as an element of business risk. “There has been a gradual transition in the management of water resources away from municipalities and toward larger private corporations,” noted Som Seif, chief executive officer of Claymore Investments recently in Standard and Poors’ The Outlook.

Despite the long-term opportunity, how does a water tech company succeed in generating return on investment through products that save water when water is nearly free? Today, a few of the best management teams are demonstrating the promise of the emerging commercial, institutional and industrial (CII) market. Large real estate concerns are learning that better management of water for several purposes, including landscaping, commercial buildings’ cooling towers, and for rainwater harvesting practices deliver savings along with increased revenues and reduced business risk.

Water Matters’ first report– Venture Investment Opportunities in Innovative Water Technology provides the first in-depth examination this emerging CII market for water technology, key early-mover markets and the companies that have found success them.

To purchase the study, click here