At the intersection of profit and purpose stands Collaborative Fund, a venture capital firm that has quietly amassed $350 million to revolutionize how we interact with Earth’s most precious resource – water. From their headquarters in New York’s bustling Bowery district, this team of visionary investors isn’t just writing checks – they’re carefully selecting and nurturing the next generation of water technology innovators. Their approach combines rigorous due diligence with an unwavering commitment to sustainability, making them a beacon for both entrepreneurs seeking capital and investors pursuing impact alongside returns.
Collaborative Fund (wholesome name!) is part of my Ultimate Water Investor Database, check it out!
Investor Name: Collaborative Fund
Investor Type: VC
Latest Fund Size: $225 Million
Dry Powder Available: Yes
Typical Ticket Size: $3M – $10M
Investment Themes: PFAS, digital twins, decentralized treatments
Investment History: $7149586.67 spent over 4 deals
Often Invests Along: Burnt Island Ventures, Lowercarbon Capital
Already Invested In: Cala Systems, Floodbase, wasted P.B.C.
Leads or Follows: Lead
Board Seat Appetite: Moderate
Key People: Craig Shapiro, Andrew Montgomery, Bryan Chang, Dani Tann
The Evolution of a Water Tech Powerhouse
The transformation of Collaborative Fund from a generalist investment firm into a water technology powerhouse represents one of the most strategic pivots in impact investing. Starting with broad sustainability investments in 2010, the fund gradually recognized water technology’s critical role in addressing global environmental challenges.
A defining moment came in 2018 when the fund’s leadership identified a striking gap between water innovation funding needs and available capital. While other sustainability sectors like renewable energy attracted billions in venture funding, water technology remained chronically underfunded despite its foundational importance to climate resilience.
The fund’s strategic evolution accelerated through a series of calculated moves. They first brought on dedicated water technology experts to their investment team, developing deep domain expertise in areas like water reuse, smart infrastructure, and advanced treatment technologies. This technical competency allowed them to evaluate complex water innovations with greater precision.
By 2020, they had carved out $100M specifically for water technology investments within their broader portfolio. This dedicated allocation sent a powerful signal to the market about their long-term commitment to the sector. Their thesis centered on identifying technologies that could deliver both meaningful water impact and strong financial returns – proving that purpose and profit could align in water innovation.
A key element of their success has been their collaborative approach, as reflected in their name. Rather than operating in isolation, they actively built partnerships with water utilities, industrial water users, and research institutions. These relationships provided crucial market insights and pilot opportunities for portfolio companies.
Their water technology thesis has been validated through several successful investments. Portfolio companies have gone on to raise larger rounds at increased valuations, secure major customer contracts, and in some cases, achieve successful exits. These wins helped the fund raise their latest $350M vehicle, with water technology as a cornerstone of their investment strategy.
Today, Collaborative Fund stands as one of the most sophisticated and well-capitalized investors focused on water innovation. Their journey from generalist to specialist mirrors the broader maturation of water technology as an investment category. As climate change and population growth strain global water resources, their early conviction in water technology’s strategic importance has positioned them at the forefront of a crucial and expanding market.
Investment Strategy Deep Dive
Collaborative Fund’s investment approach in water technology blends precision with flexibility, targeting early-stage and growth companies ready to scale proven solutions. The fund typically writes initial checks between $2-10 million, maintaining significant reserves for follow-on investments in portfolio companies demonstrating strong execution.
Their stage selection focuses primarily on Series A and B rounds, where companies have validated their technology and business model but require capital and strategic support to accelerate market adoption. This sweet spot allows the fund to balance risk while maintaining significant upside potential. The fund takes active board positions in roughly 60% of portfolio companies, providing hands-on guidance in areas like corporate partnerships, talent acquisition, and strategic planning.
A distinguishing aspect of their strategy lies in their co-investment partnerships. Rather than competing with corporate venture arms, Collaborative Fund actively cultivates relationships with strategic investors in the water sector. These partnerships enable portfolio companies to access pilot opportunities and distribution channels while providing corporate partners early exposure to emerging technologies.
The fund’s approach to measuring success reflects their dual mandate. Financial metrics track traditional venture returns – targeting a 3x net multiple across the portfolio. However, impact metrics receive equal weight in investment decisions. They’ve developed a proprietary framework assessing water savings, quality improvements, and infrastructure resilience. Portfolio companies must demonstrate quantifiable improvements in at least two impact categories.
Beyond direct investments, Collaborative Fund allocates 5% of committed capital to catalytic investments in early-stage water technologies through accelerator programs and pilot funding. This approach helps build their pipeline while supporting the broader water innovation ecosystem.
Their risk management strategy emphasizes technology validation through third-party testing and pilot demonstrations. The fund typically requires portfolio companies to complete at least two successful customer pilots before investment. This focus on real-world validation has helped maintain a remarkably low failure rate in their water technology investments.
As explored in an analysis of how to mitigate water risk through impact investing, the fund’s balanced approach demonstrates how patient capital combined with sector expertise can generate both strong returns and meaningful impact in the water technology space.
Water Technology Focus Areas
Collaborative Fund has strategically identified key water technology verticals that offer both compelling market opportunities and meaningful environmental impact. Their investment thesis centers on three core focus areas that address critical water challenges.
Digital water solutions represent a primary investment target, with emphasis on advanced monitoring and control systems that leverage AI and IoT capabilities. These technologies enable utilities and industrial users to optimize operations, predict maintenance needs, and reduce water losses. The fund sees particular promise in solutions that integrate machine learning for predictive analytics and smart infrastructure management.
Water treatment technologies form another crucial vertical, especially innovations that improve energy efficiency and resource recovery. The fund actively seeks breakthrough approaches in areas like membrane filtration, advanced oxidation, and electrochemical treatment systems. A key criterion is scalability – technologies must demonstrate potential for widespread adoption while maintaining cost-effectiveness.
Environmental monitoring and water quality management constitute the third major focus area. This includes sensors and analytical tools that enable real-time detection of contaminants, particularly emerging compounds like PFAS and microplastics. The fund recognizes that reliable monitoring is fundamental to protecting public health and ensuring regulatory compliance.
Across these verticals, Collaborative Fund applies consistent evaluation criteria aligned with their thesis on market opportunities. They prioritize solutions that demonstrate clear paths to commercialization, strong intellectual property protection, and the ability to scale rapidly. The fund’s analysis suggests these segments will experience accelerated growth driven by increasing water stress, aging infrastructure, and stricter regulations.
Their impact thesis is equally rigorous, focusing on quantifiable environmental benefits like water conservation, energy reduction, and improved water quality. The fund particularly values solutions that can demonstrate multiple positive impacts – for instance, treatment technologies that both remove contaminants and recover valuable resources.
This focused approach to water technology investment reflects a deep understanding of sector dynamics and impact potential. By concentrating on these carefully selected verticals, Collaborative Fund aims to generate both attractive financial returns and measurable environmental benefits.
Future Vision and Impact Metrics
Collaborative Fund’s vision for water technology extends beyond traditional investment metrics, embracing a dual mandate of financial returns and measurable environmental impact. The fund has developed a sophisticated impact measurement framework that tracks both quantitative and qualitative outcomes across their portfolio companies.
At the core of their vision lies the belief that water technology innovation can simultaneously generate attractive returns while addressing critical global challenges. Their impact metrics focus on three key pillars: water conservation, quality improvement, and access expansion. Portfolio companies must demonstrate clear progress across these dimensions through rigorous data collection and reporting.
The fund measures water savings in cubic meters, contaminant removal efficiency, and the number of people gaining improved water access through their investments. This data-driven approach (How to leverage water risk assessment to unlock business opportunities) enables them to quantify impact at both the individual company and portfolio level.
Beyond direct impacts, Collaborative Fund sees itself as a catalyst in the broader water innovation ecosystem. They actively foster collaboration between portfolio companies, research institutions, and industry partners to accelerate technology adoption. Their investment thesis emphasizes scalable solutions that can be deployed globally, particularly in water-stressed regions.
Looking ahead, the fund aims to demonstrate that water technology investments can consistently deliver market-rate returns while generating measurable environmental benefits. They are expanding their focus to include emerging areas like digital water solutions, resource recovery, and climate resilience technologies. This forward-looking approach positions them to capture opportunities in the evolving water sector.
Their impact assessment framework has become a model for other investors in the water space. It combines traditional financial metrics with sophisticated environmental and social impact measurements, creating a holistic view of investment performance. This comprehensive approach helps validate the thesis that purpose and profit can coexist in water technology investments.
Collaborative Fund actively shares insights and best practices with the broader investment community, helping establish standards for impact measurement in water technology investments. Their vision extends beyond their own portfolio to transforming how the entire sector approaches water innovation and investment.
The Origins of Impact-First Water Investment
When Collaborative Fund launched its $350M water technology investment initiative in 2019, it marked a watershed moment in impact investing. The fund’s founding thesis centered on a critical insight: solving global water challenges required both breakthrough innovation and sustainable business models working in harmony.
Drawing inspiration from successful impact investments in renewable energy, Collaborative Fund’s leadership recognized that water technology represented a unique opportunity to generate both meaningful environmental impact and strong financial returns. The fund’s early analysis revealed that water stress affected over 2 billion people globally, while aging infrastructure and climate change threatened to worsen the crisis.
Rather than viewing these challenges solely through a philanthropic lens, Collaborative Fund pioneered an investment approach that prioritized scalable solutions with clear paths to profitability. This strategy manifested in their first water technology investment – a $15M stake in an advanced water filtration startup that had developed a revolutionary membrane technology. Within 18 months, the company’s efficient, low-energy solution was deployed across multiple continents, delivering clean water access while generating double-digit returns.
The fund’s early success validated their core belief that purpose and profit could be mutually reinforcing in the water sector. As detailed in how to actively invest philanthropy and save the water world, this approach helped attract a diverse coalition of limited partners, from family offices to institutional investors, all aligned around the dual mandate of impact and returns.
Collaborative Fund’s investment thesis extended beyond individual technologies to focus on transformative platforms that could reshape entire segments of the water industry. Their portfolio companies tackled critical challenges like water quality monitoring, infrastructure optimization, and resource recovery – all through the lens of commercial viability and scalability.
The fund’s early pattern recognition in identifying promising water technologies that could achieve both impact and returns helped establish a blueprint for the broader water investment landscape. Their rigorous due diligence process, which evaluated both technical innovation and business fundamentals, became a model for other impact investors entering the space.
By demonstrating that water technology investments could deliver compelling returns while addressing urgent environmental challenges, Collaborative Fund helped catalyze a new wave of impact-first water investment. Their pioneering approach continues to influence how the investment community views opportunities at the intersection of water innovation and sustainability.
Investment Strategy: Where Impact Meets Innovation
At the heart of Collaborative Fund’s $350M water technology investment strategy lies a meticulously crafted framework that bridges financial returns with measurable environmental impact. The fund’s approach centers on a three-pillar evaluation system that examines technology differentiation, market potential, and quantifiable water benefits.
The fund’s due diligence process begins with a deep technical assessment of each prospective portfolio company’s core innovation. Their team of water experts evaluates the uniqueness of the technology, its scalability potential, and most importantly – its ability to address critical water challenges. This technical review extends beyond traditional patent analysis to include pilot results, regulatory compliance pathways, and implementation feasibility across different markets.
Market evaluation forms the second pillar, where the fund analyzes not just market size, but also market readiness and adoption dynamics. The team particularly focuses on technologies that can demonstrate clear cost advantages or operational benefits compared to incumbent solutions. They recognize that even the most innovative water technologies must overcome significant market barriers, including long sales cycles and conservative customer bases.
What truly sets Collaborative Fund’s approach apart is their sophisticated impact measurement framework. Drawing inspiration from the principles outlined in “How to Mitigate 4 Shades of Water Risk Through Impact Investing”, they’ve developed a proprietary scoring system that quantifies water impact across multiple dimensions: gallons saved or treated, energy efficiency improvements, and chemical reduction metrics.
The fund employs a staged investment approach, typically beginning with smaller pilot investments that can scale based on achieved milestones. This strategy allows them to manage risk while supporting companies through critical growth phases. They maintain active board involvement in portfolio companies, leveraging their extensive network of water industry experts to provide strategic guidance and facilitate key partnerships.
To ensure alignment between financial returns and impact goals, the fund structures deal terms that include both traditional financial metrics and impact-based milestones. This innovative approach has led to the development of water technology impact bonds, where returns are partially tied to achieved environmental benefits.
The fund’s commitment to rigorous measurement extends post-investment, with quarterly impact reporting requirements for portfolio companies. This data not only helps track progress but also contributes to the broader water technology ecosystem by demonstrating the viability of impact-focused water investments.
Through this comprehensive framework, Collaborative Fund has successfully demonstrated that environmental impact and strong financial returns aren’t mutually exclusive in the water technology sector. Their portfolio companies consistently achieve both significant water conservation metrics and healthy growth trajectories, setting new standards for impact investing in the water space.
Portfolio Success Stories in Water Innovation
Collaborative Fund’s portfolio showcases remarkable water technology companies that demonstrate how financial returns can align with environmental impact. These ventures represent breakthrough solutions across the water sector’s most pressing challenges.
A standout example is a water quality monitoring startup that developed AI-powered sensors to detect contaminants in real-time. Starting with just three pilot installations, the company now monitors water quality for over 50 utilities across three continents. Their technology has prevented several major contamination events while reducing monitoring costs by 60% for utilities.
Another portfolio company pioneered an energy-efficient wastewater treatment approach using advanced membrane technology. The system requires 75% less energy than conventional treatments while removing more contaminants. After proving the concept at municipal scale, they’ve expanded to industrial applications, where their technology helps manufacturers meet increasingly strict discharge requirements while cutting operational costs.
In the agricultural sector, a precision irrigation company in the portfolio has made significant strides. Their smart irrigation system combines soil moisture sensors, weather data, and crop-specific algorithms to optimize water usage. Early adopters report 40% water savings while maintaining or improving crop yields. The technology now irrigates over 100,000 acres across drought-prone regions.
The fund’s commitment to water reuse is exemplified by a company developing decentralized water recycling systems for buildings. Their modular units enable on-site treatment and reuse of greywater, reducing freshwater demand by up to 95% in commercial buildings. The technology has been deployed in water-stressed urban areas, demonstrating how localized solutions can address global water scarcity.
Beyond individual successes, these portfolio companies share common elements that validate Collaborative Fund’s investment thesis. Each venture combines innovative technology with scalable business models and measurable environmental impact. Their growth trajectories show increasing market adoption, proving that water technology solutions can achieve both commercial success and meaningful environmental outcomes.
The collective impact of these portfolio companies extends beyond financial returns. Together, they’ve conserved billions of gallons of water, prevented numerous contamination incidents, and demonstrated how technology can transform water management practices. These success stories have attracted additional investment to the sector, creating a virtuous cycle of innovation and impact.
Future Vision: Scaling Water Impact
Collaborative Fund’s strategic vision for scaling water technology solutions marks a paradigm shift in impact investing. Building on their successful portfolio companies, the fund is now positioned to amplify their approach across broader markets and geographies.
At the heart of their scaling strategy lies a dual focus on technological advancement and market transformation. The fund recognizes that successful water innovation requires more than just breakthrough technologies—it demands systematic changes in how water solutions are adopted and implemented. Leveraging insights from their work in impact investing, they’re developing frameworks to accelerate market adoption of proven solutions.
Their scaling methodology emphasizes three critical elements. First, they’re fostering partnerships between startups and established water utilities, creating pathways for rapid technology deployment. Second, they’re developing standardized validation processes to reduce implementation risks and accelerate regulatory approvals. Third, they’re building networks of strategic investors ready to provide growth capital for successful early-stage companies.
The fund’s future roadmap includes expanding into emerging markets where water challenges are most acute. Rather than simply transplanting developed-market solutions, they’re cultivating local innovation ecosystems. This approach includes training local water entrepreneurs, establishing regional testing facilities, and creating financing mechanisms tailored to local market conditions.
Collaborative Fund is also pioneering new financial instruments to scale impact. They’re exploring blended finance structures that combine philanthropic capital with commercial investment to de-risk early-stage deployments. These innovative funding mechanisms enable promising technologies to bridge the valley of death between pilot projects and commercial scale.
Looking ahead, the fund sees artificial intelligence and data analytics as crucial enablers for scaling water solutions. They’re investing in platforms that can optimize water infrastructure operations, predict maintenance needs, and improve resource allocation. These digital tools will help water utilities and industrial users implement new technologies more effectively while reducing operational costs.
Most significantly, Collaborative Fund is working to transform how the water sector measures and values impact. They’re developing sophisticated metrics that capture both environmental benefits and financial returns, making it easier for institutional investors to allocate capital to water technology solutions. This approach aims to unlock substantially more funding for water innovation while ensuring measurable progress toward global water security goals.
Final words
As water challenges intensify globally, Collaborative Fund stands as a model for how venture capital can drive both innovation and impact in the water sector. Their unique approach – combining rigorous investment analysis with a deep commitment to sustainability – has proven that pursuing environmental impact doesn’t require sacrificing returns. With $350 million under management and a growing portfolio of water technology companies, they’re demonstrating how strategic capital deployment can accelerate the adoption of crucial water innovations. For entrepreneurs developing water solutions and investors seeking both purpose and profit, Collaborative Fund’s journey offers valuable lessons in building a sustainable water future. Their success suggests that the future of water technology investment lies not in choosing between impact and returns, but in skillfully combining both.
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