Funding for startups working on water purification and conservation technologies has not dried up in recent quarters, even as venture investment has shrunk significantly globally.
This was a finding from an analysis of Crunchbase data on funding for water industry categories. In fact, total investment in 2023 was higher than in 2021, when the startup funding environment was very active. This year also got off to a good start.
To compare the numbers, we've charted annual investments since 2019 in companies in the water, water purification, and water transportation categories.
tackle big problems
The largest rounds go to companies that tackle very big problems, typically those that develop global markets from the get-go.
This is not surprising given the number of urgent areas that need to be addressed. According to the World Water Forum, more than 650 million people in around 40 countries currently suffer from water scarcity. Groundwater supplies around the world are under serious threat from population growth, industrial development, overexploitation, climate change, and inadequate water management.
While startups are not driving solutions overnight, they do offer some solutions that have the potential to significantly improve the status quo. This was enough to attract a steady flow of funds.
Among the biggest winners on our list is Gradiant, a Boston-based sustainability-minded startup focused on wastewater treatment. The company has raised more than $390 million in funding to date, including a $225 million Series D last May.
Founded in 2013 at MIT, Gradiant has had a broad mission to reduce industrial water use and wastewater emissions across sectors including semiconductors, pharmaceuticals, mining, and chemical processing. According to Gradient, the region is a high-needs region, with 45% of global water consumption currently coming from industry and 70% of wastewater being “disposed of untreated into the wild.”
Source Inc., a Scottsdale, Ariz.-based maker of solar power equipment that extracts potable water from the atmosphere, is another investor favorite. The 10-year-old company has raised more than $360 million to date, with Breakthrough Energy Ventures among its key backers. Sources say the company's hydropanels are currently producing water in some of the driest places on Earth.
A wave of funding will arrive in 2024, but an exit has not materialized yet.
So far this year, we haven't seen a rush of water funding, but there has been more than a trickle of funding.
The latest big funding news was announced last week. Avnos, a Los Angeles-based startup developing direct air capture technology that simultaneously captures both carbon dioxide and water from the atmosphere, closes a $36 million Series A round, bringing total funding to $116 million. It was announced that it became a dollar.
A month ago, Indiana-based 120 Water raised $43 million in growth funding led by Edison Partners. The startup provides software and digital sampling kits for water utilities to monitor safety and compliance and manage wastewater monitoring programs.
As for exits, we have yet to see ambitious companies in the water treatment and purification space enter the public market due to the weak IPO market. There's been talk about the possibility that Santa Monica, Calif.-based canned water brand Liquid Death will offer a product, but this is more of a consumer-oriented initiative and will help the world's water supply. and the impact on water quality issues is negligible.
But for now, private market resources appear to be sufficient to sustain the proliferation of sustainability-focused water startups.
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