Research & Data

Water tech investment rises

Corporate and institutional venture investment into the water sector rose during the first half of 2014, according to i3, an online platform providing intelligence on innovation.

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Private investment into the water sector, particularly water tech, has risen slightly during the first half of this year to $140 million according to data published by i3, an online platform providing intelligence on innovation. This is up from the $91 million invested into water technology during the second half of 2013 and $118 million during the first half of 2013.

The number of deals fell however, to 33 from 47 in H1 2013 and 36 in H2 2013.

Analysts at i3 had expected a more substantial increase in investment due to the prevalence of water shortage issues globally; particularly California and Australia, according to the report.

But the modest change is indicative of the nature of the water shortages themselves, according to Michael Bevan, managing director at Element Partners, a Pennsylvania-based growth equity firm which invested into two water tech companies this year, Seven Seas Water and Quench.

“Water issues are a localised problem, as it is very expensive to transport water any distance,” he told Agri Investor. “Water problems require both local funding and local resolutions.”

As an ingested natural resource, the water technology industry has exercised caution when developing new products surrounding it and therefore their adoption has been slow, added Bevan.

“In recent years, the investment community has shown greater interest in the water sector. People have come to realize, however, that investing in water requires a long gestation cycle. The water industry is very conservative in how it adopts technology and – from an investment standpoint – this means change happens slowly and businesses are built more slowly. As a result, investors have come to realize that the water sector requires different investment strategies compared to other consumer industries,” he said.

Water investment is also very expensive. Australian water and agribusiness company, Tandou, reported a disappointing net profit of A$200,000 ($186,000; €141,000) owing to numerous factors, including heavy investment in water holdings, which now total A$78 million, an increase of 148 percent, according to local reports.