What Can We Do About Water?

It’s about time we dive into the wicked challenges surrounding water, why now things might be different, and where the venture community should pay closer attention.

Water scarcity and quality issues are often invisible to those who have never faced them.

However, having lived in Mexico City and with family in the American Southwest, I have witnessed the profound impact of water scarcity — from small businesses grappling with usage limits in Mexico City’s bustling Colonia Condesa to plummeting property values in New Mexico where wells have dried up.

In the next decade, we anticipate significant shifts: businesses will be held accountable for excessive water usage, families will opt for higher-quality water solutions, and technology will be crucial in reducing wastage.

Let’s start with the basics

Water is heavy, corrosive, costly to transport, evaporates easily, and is often not used where it is most abundant. Below are a few key facts and figures that grounded our research:

The macro landscape today

We have reached an inflection point defined by political will, corporate intervention, consumer awareness, new technologies, and early activity in M&A and public markets.

“When the well is dry, we know the worth of water.” — Ben Franklin

The value chain and its opportunity zones

Ten years ago, the water value chain — from source and treatment to distribution — were reserved for major CAPEX project developers in partnership with state governments. Today, each aspect of the water value chain welcomes a new generation of venture backed players.


1. Monitoring technology has seen the most activity

Problems like remote shutoff, leak detection, and usage management are a consistent thorn in the side of major agriculture and real estate customers. Insights from IoT devices and operator facing SaaS tools are resulting in more visibility, time savings, and risk mitigation for enterprise customers (FarmHQ, LUMO). AI enabled platforms (LAIIER, SewerAI) are taking that service to the next level with predictive demand and maintenance analytics. At the corporate level, platforms like Waterplan enable executives to manage global supply chains facing increasing scarcity risks.

2. Renewed venture interest in water treatment companies

Why? Increased regulatory concerns surrounding PFAS have put corporate stewardship in the spotlight. End-to-end solutions like Gradiant, Aclarity, and Membrion offer a water treatment solution that reduces, reclaims, and renews water supply for industrial customers. Many of these solutions require upfront customer CAPEX, along with ongoing subscriptions and servicing arrangements which can be daunting for smaller businesses but fundamental for larger customers in the chemical, food, and manufacturing sectors. Hyfe is a pioneer in waste-to-value offerings transforming wastewater into feedstocks for offtakers.

Atmospheric generation membranes enable water to be drawn down from thin air based on precipitation, the open question for players like Aquaria is to master the volume production in arid regions. If you cannot produce at a useful volume when needed (or store it appropriately), customers either won’t build in certain regions or continue to need deep well infrastructure. SOURCE has coupled atmospheric generation with home heating and energy source applications, enabling higher degrees of circularity. Spout leverages the same core technology, but instead offers it as an elegant kitchen top water supply.


Unique systemic risks

Before racing ahead to build and invest in the companies looking to address these massive challenges, there are a few unique risks to keep top of mind.

Collab Fund’s perspective on the market today

As we think about investing in water, we are looking for transformational technologies at the seed stage, and scale-ready companies at later stages. At the seed, we ask - if this thing is successful, will it change the reality today as we know it? That might be a fundamental shift in how water is created, treated, or managed for households, corporations, and governments. Later on it’s about finding companies that are eager to get to market.

There is plenty of room for entrepreneurs to build category-defining companies in the water space. Technology has enabled new markets, and the problem of quality and use has reached a boiling point. If you are building in the space, please don’t hesitate to reach out. We are excited to meet you.