Investments in water & wastewater technologies were on a supposedly unsustainable high during the first half of 2012. The latter half of the year saw relatively minimal activity, accounting for just over 12% of total water dollars invested in 2012. What happened?
According to preliminary data from Cleantech Group, the number of deals dropped significantly – hovering near 50 in 1H12 but falling to less than 20 in 2H12. It seems investors lost all interest in supporting private companies focused on drinking water treatment, as I saw no deals tracked for pure filtration or disinfection technologies. I also noted the absence of big money going towards service providers like Golden State Environment and Doshio, which together accounted for $80MM in growth equity in 1Q12.
Taking a look at the investments that were made, it is apparent that wastewater is continuing to garner significant attention, with nearly half of 2H12 investor dollars going towards companies involved in the treatment of industrial and/or municipal wastewater. Reuse was one of the more prominent themes here, which comes as no surprise given the heightened anxiety around climate change (and its impact on water scarcity) in the aftermath of events like Hurricane Sandy and global drought. I also saw that smart water companies attracted nearly $7.5MM, which is in line with the surge of digital solutions being introduced elsewhere in the cleantech industry.
So what does this mean for 2013? I think it means the “water-energy nexus” will be pretty much the only thing we hear about, as companies began to realize this value proposition will attract the most investor attention. Which technologies will treat water using the least amount of energy? Which technologies will help avoid energy costs associated with transportation of wastewater to designated facilities? What solution will extract and capture the most energy from a waste stream in order to offset energy costs? Which solution will best promote water conservation to reduce the amount of water treated and transported (saving associated energy costs)? Even infrastructure plays – pumps and pipes providers – are playing up the energy efficiency mantra to move ahead. On a slower but similar path will be water’s connection to food and agriculture, though I do not suspect this theme to steal headlines just yet.
Arti Patel is a guest blogger for Cleantech Group. You can email her at: firstname.lastname@example.org
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