4 min read
Water demand is increasing at an unsustainable rate. There will be a 400% increase in industrial water use expected by 2050. While global demand for water has been exceeding its availability, water sources are also increasingly contaminated. As a resource, water is unique in its irreplaceability – There are no substitutes for this fixed supply to meet growing demand.
The global water industry is rapidly moving from a state of abundance to a state of scarcity, with water supplies worldwide increasingly under stress.
Stringent regulations around water quality are forcing water users across sectors to invest in newer cutting-edge technologies to meet these standards. Here are 4 macro growth drivers contributing to new capital investment requirements and help drive the already strong demand for monitoring & treatment technologies in water:
- Emerging contaminants such as pesticides, pharmaceuticals, antibiotics and hormones are accumulating in water supplies and require innovative technologies for efficient removal. Public awareness around these contaminants lead to rapidly growing demand for filtration solutions at point of use.
- Historically many decisions in the water industry were made based on manually collected samples, which often took several days to process in a lab. Digitisation is rapidly penetrating the water industry. Technologies such as smart real-time sensors, AI, machine learning and satellite imaging offer potential for large efficiency gains, optimisation of investment decisions and increased water security.
- With water increasingly in short supply coupled with concerns over climate change, technology is now stepping to shore up the deficiencies. Smart metering, leak detection, efficient irrigation in agricultural and landscape applications, water reuse and desalinization are examples of innovations in water resource management.
- Water infrastructure around the Western world is ageing and large investments are needed for replacement. The University of Michigan’s 2015 Drinking Water Infrastructure Needs Survey and Assessment found that the US needs to invest a minimum of $472.6bn over the 2015-2035 period in water utility companies to ensure a safe freshwater supply. This replacement is often coupled with the incorporation of new technologies to increase efficiency.
We are aware that 60% of the supply shortage cannot be solved by legacy technologies. With this in mind, I believe that strengthening the innovation infrastructure for water and creating more water awareness are needed to dramatically scale global solutions to avert further water challenges globally.
Investing in water brings vast opportunities
Did you know that the that the global water & wastewater market is valued at over $580 billion annually?
Historically water has been a consistent outperformer against a wide range of asset classes, featuring a high return, medium risk profile. Publicly traded water technology companies outperform general market
- The S-Net Global Water provides 15-year annual returns of +16.72%, compared to +13.40% annual return of the S&P 500 and +15.66% of the Nasdaq Composite
- With Global Water companies growing almost as fast as top-tier US companies, the 2019 return of +16.8% indicates that its growth is inherent
- The Global Water Index outperforms the S&P Eco Index (+5.6% 10-year annual returns), showing that water technologies are booming
To do this 98 Sparks is driving a multi-million dollar water initiative including education and acceleration programs. They leverage knowledge and networks to create global awareness and investments into innovative water solutions. This initiative is seeking support from impact investors, awareness partners and multinationals to create a sustainable impact.
The capital pillar just mentioned is executed by PureTerra Ventures – PureTerra is strictly a water-focused venture capital firm, with a unique combination of global network, expertise and resources. The result of this infrastructure is a high-quality deal flow which enables PureTerra to identify and pick winners to create value and measurable impact in this fast-growing sector. PureTerra focuses on Smart Water Technology, Residential Water Treatment and Industrial wastewater treatment. By investing in these sub-sectors, PureTerra identifies portfolios that are suitable for VC investment, with shorter sales cycles, scalable business models, free market dynamics and high uptake of and strong demand for innovation.