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Aqwise, a fixed biofilm water and wastewater treatment solutions provider, raised $4.5 million in a financing round led by Triveni Engineering & Industries.  More recently, Epuramat, a provider of compact, energy-efficient and chemical-free wastewater treatment solutions, raised over $10 million in a Series B financing round.  These companies are ideal representatives of the stellar investment trends we’ve seen in water lately – not only because they successfully raised funding from the investor community, but because they both provide industrial wastewater treatment solutions.

Last week, Sheeraz Haji (CEO) and I led a webinar focused on the industrial wastewater market (watch a free replay here).  We kicked things off with a quick look at VC trends in water, which included a view of where money is actually going from a technology, application, and target user perspective.  In doing this analysis, I learned that over half (52%) of VC dollars in the first half of 2012 went to companies developing wastewater treatment solutions – more than I had suspected.  Digging deeper into the numbers, it was uncovered that most of these solutions were specifically tailored for industrial users.

The growing appeal of the industrial wastewater treatment market for entrepreneurs and investors is real.  For beginners, industries are increasingly concerned with cutting costs as the global economy struggles to recover, and exorbitant water expenses are some of the first to be evaluated.  The price of water has slowly begun to creep up to eventually reflect its true value for two main reasons: (1) climate change and excessive droughts are making water scarcity a real concern and (2) water providers (utilities) are desperate for money as costly infrastructure repairs are getting harder to ignore.  As a result, industries are seeking new ways to treat and potentially reuse water in hopes of decreasing their freshwater intake – and their related water expense.

Another driver of the industrial wastewater market is the tightening regulatory environment pertaining to the presence of nutrients and/or contaminants in a wastewater stream.  These new standards are requiring industries to take action or risk being fined, presenting a ripe opportunity for innovative technologies that save time, energy, water, or a combination thereof.  Additional treatment of industrial wastewater also helps companies to reduce wastewater discharge costs, which would be another positive in this down economy.

Finally, start-ups are grateful for the relative ease with which they can enter the industrial market, which is in stark contrast to the notoriously complex utility market.  With government involvement limited to releasing defined regulations and standards, companies are finding it easier to identify and contact key decision-makers, to pitch a no nonsense value proposition, and to set-up and run pilot projects that prove their technology’s capabilities.

The thoughts I have outlined above are merely my attempt at scratching the surface of “industrial water.”  In my acknowledgement that there is much more to be said about the market, I invite you to reach out to me with new insights or firsthand experiences on sourcing/implementing innovation in your wastewater treatment process.  You can also come find me at our Water Innovation Summit, where we will spend an entire day exploring industrial water use, treatment, and disposal trends.

Arti Patel is an Associate on the Research & Advisory team at Cleantech Group.