#61: Climatetech's Next Wave: Water (Water Impact Partners)
Last week, I reconnected with a growth investor after a long hiatus. Since our last conversation, their team has significantly expanded, and they have made considerable investments, particularly in Climate Tech. Notably, they have been active contributors to FOAK (First of a Kind) challenges. However, our ecosystem still needs more investors like them.
I continue to believe that Climate Tech is one of the most relevant sectors at the moment and I've categorized Climate Tech investors into two main groups: those resembling standard VCs, often behaving like software investors, and those diving into deep tech investments—the true FOAK investors. The latter group earns my admiration for tackling our net-zero challenges head-on.
Why is water the next focus?
My focus on Climate tech also started as one of the software investors but I've since privately turned into a more true FOAK investor. One of the interesting areas right now for me is water. And why is that? Well here we go.
In 2023, investments in solar and wind energy totaled $1.7 trillion, while investments in water stood at a mere $773 million. Since 2018, approximately 1,200 investments have been made in water, with an average investment of only $1.4 million. The water market is projected to reach $1.4 trillion over the next decade, driven by climate change, issues of water scarcity, excess, contamination, or a combination thereof. Access to water is increasingly becoming a critical factor for economic and population growth in various regions.
Water Impact Partners
I foresee water becoming the next major investment focus within Climate Tech. Through my Corporate Venturing network, I've had the opportunity to work with Jesper Munkholm (جيسبر مونكهولم) and Sead Bajrovic , the founding partners of Water Impact Partners. With their backgrounds at GRUNDFOS and Aliaxis Next, they bring profound knowledge of water issues. Together with senior advisors Alexander van 't Riet and Vinod Jose , they are creating something truly inspiring.
During my recent conversation with Jesper, he highlighted that only about ten dedicated funds and advisories are actively supporting the growth of new water technologies. This is not nearly enough to compete with investments in solar and wind. Hence, the major gap led to the creation of Water Impact Partners: supporting ambitious entrepreneurs and diverse investors in the water industry for massive impact.
Jesper emphasized that scalability is the primary challenge—the FOAK challenge. To drive scalability in new water technologies across the industry, it's crucial to have deep insights into the complexities of water. Supporting top water technology companies to scale and ensuring investors understand the industry's intricacies are essential for driving significant impact and innovation in this traditionally risk-averse sector.
Sead shared his perspectives on the water industry's challenges. The sector faces numerous issues: it's often taken for granted, underfinanced, slow to adopt new technologies due to traditional relationships, generational transitions, and regulatory hurdles. Additional challenges include reducing leakages, modernizing infrastructure, responding to extreme weather events, ensuring water quality, increasing supply, and reusing wastewater to support a circular economy. The biggest hurdle, however, is the lack of transformative solutions and scaling these for massive impact. Despite incremental innovations and efficiency gains over the last 50+ years, many products and solutions in the water industry have remained relatively unchanged.
Nonetheless, recent technological advancements in material science, robotics, manufacturing, digital technologies, and green energy are fostering disruptive and sustainable solutions. The industry must collaborate to scale these advancements for the benefit of people and the planet.
Their model:
With their extensive experience in water—establishing and selling companies and scaling ideas within CVC—Water Impact Partners offers a comprehensive range of services. These services include building strategies for companies, an Operating Partner model, scouting for start-ups, managing M&A processes, conducting due diligence, and providing CVC as a service.
So if you are interested in gaining more insights then please reach out to the Water Impact team. I promise you will not be dissapointed.
Conclusion:
In conclusion, the water sector is poised to become the next major focus within Climate Tech. As we continue to see the impacts of climate change, the importance of sustainable water management cannot be overstated. Investments in water technologies have lagged behind other sectors like solar and wind, but the potential for growth and impact is immense.
I hope you enjoyed this newsletter. If you have any suggestions or contributions that you would like to share with me, please do not hesitate to reach out. I would be delighted to hear from you.