Why Now is the Time for Innovative Water Technology

Why Now is the Time for Innovative Water Technology

With risks posed by water scarcity, aging infrastructure and development, there's no question that better solutions for water management are needed. But what's the market outlook for new water technology and what do venture capitalists want to see in prospects?

The Artemis Project presented views on the subject from four water industry experts yesterday as the entry deadline approaches for the company's annual Water Top 50 contest. The consulting firm specializes in helping companies devise water strategies that foster sustainable growth, and its Top 50 competition showcases the firms that are considered the most promising developers of advanced water technology. The deadline for contest applications is 11:59 p.m. tomorrow (Saturday, January 15), but on a case-by-case basis the organization will consider requests for an extension.

"We need to redefine how we manage water resources," said Artemis Project Founder and Principal Laura Shenkar in the media roundtable conducted online on Thursday. "The purpose of the Artemis Project's Top 50 is to identify the technologies that can provide a magnitude of savings by managing water resources and use more efficiently."

Contest winners gain exposure to potential customers, strategic customers and investors (here is a list of the 2010 Top 50).

Christopher Gasson, publisher of Global Water Intelligence, offered 4 1/2 reasons for why now is a prime time for the emerging water technology industry. "I started out with five (reasons) but stopped halfway through the fifth," Gasson said, chuckling. His points were:

1. Water technology is a greenfield site. "Basically, there isn't much out there," he said.Traditionally water has been viewed as a low-tech proposition and was considered unattractive to innovators or investors because the root of its delivery -- a pipe -- has been around for millennia and in the U.S. there is no competition to deliver water since it's supplied by government- or municipally-owned utilities. However, development of nanotechnology, biotechnology and IT solutions are among the factors fueling a nascent industry that could turn those perceptions on their head,

2. The scale of challenge is increasing. As the availability of water grows more constrained, the demand for water -- particularly for food and energy -- is spiraling and the standards for water treatment are increasing as well.

3. The market is becoming more global. Interest in water management solutions is growing on several fronts. Examples include involvement of major global corporations, such as IBM, General Electric and Siemens, and the fact that governments are looking internationally for solutions to address water issues.

4. Industrial water users are at what Gasson called "the sharp end." For example, he said, industries use more and pay more for water than households and water reuse and materials reclamation technology have the potential to revolutionize the sector. And, though water is often crucial to business, some industries throw water away, he said. The oil industry produces 2.6 more times more water than oil, but jettisons the water, he said.

4 1/2. Silicon Valley has woken up as evidenced by firms in the "Silicon Valley aristocracy" making investments in advanced water tech firms, he said. They include Khosla Ventures investment in NanoH20, Kleiner Perkins Caufield & Byers' investment in APTwater and Draper Fisher Jurvetson's investment in Oasys.

Mia Javier, an analyst with the Cleantech Group market research and advisory firm, said that increasingly water is "seen as being core to a rapidly growing cleantech ecosystem." However, there are challenges in obtaining venture capital, she said, noting that investments in water technology currently represent just 3 percent of cleantech venture financing. The barriers include concerns about market fragmentation, long pilot cycles, unpredictable returns on investment and potentially large capital requirements in order to bring projects to scale, Javier said.

Signs that those perceptions are changing for the better include the Artemis Project's Top 50 list for last year, in which half the firms on the roster are venture-backed companies, Javier said. "We have a lot of work ahead of us ... but I'm cautiously optimistic to see how the market will change to promote these opportunities," she said.

Rafael Simon, venture partner at VantagePoint, said firms entering the energy field of water technology should keep in mind that:

  • Water is usually underpriced, so savings are not always economically valued accurately.
  • Adoption cycles can run as long as a decade because of relatively conservative customers for technology.
  • Powerful incumbents can block new entrants. In forming their strategies, firms should think about "how the technology will affect the existing group," Simon said.
  • Technology validation is unusually difficult because each site is unique even though the concept for the solution may be universal.
  • Structural flaws can -- and often do -- prevent potentially breakthrough technologies from achieving attractive returns.

The Artemis Project conducts webinars on water management strategies, technologies and success stories that are archived and available on the firm's website. More information on the Top 50 contest is available at:

Requests for consideration of a deadline extension may be sent to
[email protected]

Image CC licensed by flickr user fRaniShooters.