Water: A Constraint on Industrial Growth?

More and more mines around the world are shutting down operations for lack of water, said a founder whose last company sold to the mining industry. Yet the pitch was always a lower price for what the company delivered. The large water savings came on top and ended up in the sustainability report. That gap, between water as a hard limit and water as an afterthought, ran through the Ripple hosted by Steve Kloos of Burnt Island Ventures and Megan Gerryts of the World Economic Forum.

Burnt Island invests only in water start-ups, and Steve began with the thesis behind that. When water is plentiful it is close to free, and nobody needs new technology. But its economic value is well above what people have paid, and when it is scarce they pay up to that value. As in energy, efficiency comes first and new supply second, with municipal recycling and seawater desalination playing the part of wind and solar. Because that new water can cost less than it is worth to its users, Steve said, water need not cap industrial growth, and the sector becomes investable.

Scarcity arrives

Steve listed the pressures. The Colorado River basin typically receives around 16 million acre-feet a year, and this year's flow will be 7–8 million, with Lake Mead and Lake Powell close to empty. Much of Europe's and America's water and sewer infrastructure was built after the Second World War for a 50–70-year life. Chip fabs at three-nanometre nodes lose yield to minute impurities, so they must make purer water while wasting less. Megan said water has risen on the corporate agenda for three years, mostly as a risk, and now worries insurers and real-estate companies as well. Community pushback against data centres gives tech companies a reason to invest in water to keep their social licence to operate.

For some manufacturers the limit is already here. An investor described a start-up that filters microplastics out of textile plants' wastewater. Removing the solids before treatment saves 30–40% of the treatment itself, and some plants lack the floor space for the big tanks of the old method. Some of its customers in Portugal said water was the only thing stopping them producing more. A desalination founder working in the Middle East said industrial sites there want their own supply. A central plant, a distribution network and purification each add cost to the tariff, while on-site desalination can make ultra-pure water with the plant's waste heat and remove a single point of failure, which matters more with conflict in the region.

This is not a space where you can expect any unicorns to come up.

Sold as something else

In most cases, though, there is no water premium, just as there is no green premium, the former mining supplier said, so a start-up needs a business model that sells something of value, with water on top. A founder building sensing and analytics for industrial wastewater had found the same. Food and beverage customers respond to lower energy use, chemical costs and downtime, and one meat manufacturer cared more about the kilowatt-hours of its treatment plant than about any water metric. Megan saw that starting to shift. Water is barely on anyone's list of sustainability metrics, but it is becoming a measure of security and resilience.

A fund built without unicorns

An investor in nature technology raised the opportunity cost. Water exits usually go to private equity or strategic buyers, so at the same valuation and risk, an energy-resilience start-up looks the more credible route to venture returns. Steve answered with entry prices. Water companies are valued more modestly than those in other sectors, and far below AI companies. "This is not a space where you can expect any unicorns to come up," Steve said, so every company has to deliver a decent return. Burnt Island models five scenarios for each deal, from zero to a home run, and needs a blended 6x as a minimum.

Of its 36 investments, one has gone bankrupt and three have exited. One exit, SewerAI, uses AI to read sewer inspection video and draw up maintenance budgets for utilities, and its later rounds drew investors with no interest in water as such, because the revenue curve spoke for itself. Asked whether one failure in 36 made water a safer asset, Steve said no. Water can be a great place to lose money. But the first fund, with one 9x exit, sits on paper in the top 4% of all 2021-vintage funds across sectors. Another investor said water returns come from the median, not from outliers, and that changes whom investors back.

One more investor rejected the premise outright. "I think the unicorns are coming." Pressures that were long hidden are biting at once, they said. Opposition to data centres, the bill for underinvested public systems, utilities built around a one-year hydrological cycle that must now plan across 15 years, and contaminants such as PFAS all mean the system has to change within 10 to 15 years. Unicorns appear only when an industry is disrupted enough to open a vast market, and in water that will come with decentralisation. While the central model stands there is no room for one, only for solid returns from improving what exists. That, the investor said, is why Burnt Island has done so well.

This Ripple was hosted by Steve Kloos (Burnt Island Ventures) and Megan Gerryts (World Economic Forum) at The Drop 2026 on 16 September.