Reverse osmosis has run on essentially the same membrane for more than forty years, and it isn’t because nobody built a better one. Nala Membranes did. It’s a sulfonated polysulfone film that shrugs off chlorine where today’s polyamide membranes come apart, and that one property kills the biofouling that quietly eats about a quarter of a desalination plant’s operating cost. A major membrane manufacturer’s engineers looked at the chemistry, liked it, and their business side said no. So the question I actually wanted to answer isn’t whether the technology works, because it does. It’s whether a company that has raised $15.15 million, roughly a sixth of what ZwitterCo banked, can get a genuinely new material adopted in a market with three or four serious players that hasn’t changed its core material in two generations.

And I’m going somewhere with this, because the honest answer runs through the least glamorous corner of the water business and past at least one fresh grave.

What did Nala Membranes actually invent?

Nala Membranes is a North Carolina startup built on polymer-chemistry work from Virginia Tech and the University of Texas at Austin, co-founded by CEO Sue Mecham and Dr. Judy Riffle, and what it has made is the first new reverse osmosis membrane material in over forty years: a sulfonated polysulfone thin film composite.

Let me unpack that, because “thin film composite” (TFC) is doing a lot of work. Every modern RO membrane is a sandwich, and the slice that actually rejects the salt is a wafer-thin polymer layer laid on top of a support. Since the late 1970s that layer has been a polyamide, and polyamide has two well-known weaknesses: its surface is rough, so gunk sticks to it, and chlorine tears it apart, so you can’t use the cheapest, most obvious tool in water treatment to keep it clean. Before polyamide, the industry ran on cellulose acetate, which was smooth and could tolerate a bit of chlorine, but it lost the flux-and-rejection race and got displaced. Nala’s pitch is that it brought both of those old virtues back, with a new material and a new way of making it.

The smooth surface is the part chemists get excited about, because it comes from the manufacturing process, not from a coating you add on afterward. Nala makes its polymer first and then lays it down, where polyamide is grown in place on the membrane in a reaction that leaves behind a rough finish and a couple of nasty waste streams. Same trick the cellulose acetate people had, brought forward to a modern high-performance film.

The chlorine advantage, and the 24% it targets

Here’s the money question, because a chemistry curiosity only becomes an investable company when it changes a number on an operator’s spreadsheet, and for RO that number is biofouling. Biofouling is just bacteria setting up house on the membrane, and the standard, boring, cheap way to stop bacteria in water is chlorine. Polyamide can’t take it, so operators fight fouling with pre-treatment, downtime, and expensive cleaning cycles instead. Nala can take it, down at drinking-water doses to keep bugs from growing, and all the way up to 10,000 ppm of hypochlorite when a membrane is genuinely filthy.

There’s an old rule of thumb in this industry that if you’re not at least 20% better than the incumbent, you don’t get a seat at the table. Sue’s answer clears that bar, and she is careful to source it rather than round it up:

That’s an operating-cost story, which matters, because in most industrial water deals the argument long ago stopped being about the sticker price of the membrane and became about what it costs you to run the thing over its life. A membrane you can chlorine-clean instead of babysit is worth more every single year, not just on day one.

Why did the membrane giants pass on it?

This is the part that gives the episode its title, and it’s more instructive than the usual founder war story. Around 2010 and 2011, before Nala even existed, the underlying sulfonated polysulfone chemistry landed on the desk of one of the big membrane manufacturers. Their technical people ran tests and liked what they saw.

Now, my instinct when I hear “the giant turned it down” is to reach for the hall of fame of corporate blindness, and the episode does exactly that: Kodak sitting on the digital camera its own engineer built, Blockbuster waving Netflix through, Xerox letting personal computing walk out the door. The trouble is that this is survivor bias dressed up as destiny. Internet Explorer held nearly 96% of the browser market in the early 2000s while being nobody’s favorite browser. Betamax was better than VHS and lost anyway. We still type on QWERTY keyboards that were designed to slow us down. Incumbency is a moat, not an accident, and the academic read is that you need to reach somewhere between 15% and 30% market penetration before adoption becomes self-sustaining. Sue puts the same wall in plainer terms: on the membrane side, she says, people can’t even fathom what you mean by a new membrane, because it’s been so long since they had one. I’ve argued this at length in a newsletter on why your water tech is probably not as disruptive as your pitch deck claims, and if that debate is your kind of fun, my newsletter is where I keep having it.

Has anyone ever actually disrupted water tech?

Yes, but you can almost count the clean examples on one hand, and every one of them took a decade or three. These are the cases I keep reaching for on the show. Trojan started in 1977 as three people in Canada betting that ultraviolet light could replace chlorine for disinfection, and most of the industry laughed until UV became mainstream municipal practice in the 2000s. The pressure exchanger, the device that recovers up to 60% of the energy in a desalination plant, arrived in 1992 and didn’t become standard until the mid-2010s, by which point something like 70 million people were drinking water that had passed through one. And the canonical case is Andrew Benedek pushing the membrane bioreactor through the 1980s and 1990s while everyone told him membranes had no place in wastewater, right up until GE bought Zenon in 2006 and the idea became obvious.

So the material working is the easy part. The pattern in this sector is that a better mousetrap wins a niche first and the mainstream last, if ever. Even today, polymer membranes hold about 93% of the market against roughly 7% for ceramics, a 2025 Global Water Intelligence split I chewed over in my newsletter, and that gap has barely moved despite ceramics being genuinely excellent. Membranes, it turns out, don’t much like a winner-take-all story.

How does Nala’s $15 million stack up against the field?

This is where I get to plug in my own numbers, because I keep a section of my Leviathan database on exactly this cohort, the startups trying to move the membrane itself, and laid side by side they tell a story the pitch decks don’t.

Look at what most of that money is actually buying. ZwitterCo, which has raised close to six times what Nala has, puts a clever zwitterionic layer on top of a polyamide. Aqua Membranes, whose 3D-printed spacers I covered with Craig Beckman, improves the plumbing around the membrane. Evove, which I looked at through its lithium work, coats and prints. Nearly the whole field is innovating around the polyamide rather than replacing it, which is the rational thing to do, because replacing the material is the hardest possible version of this game. The one team that took a swing as deep as Nala’s, Aquaporin, built biomimetic membranes out of actual water-channel proteins, raised nearly $25 million doing it, and is now dead. That’s the company Nala keeps, and it’s worth sitting with before you get too excited about a founder claiming to have out-chemistried an entire industry on $15 million.

Can a bootstrapped startup out-patient the oligopoly?

I think the interesting answer is that Nala isn’t trying to beat the giants at all, and that’s precisely why it might work. Run it through the framework I use for this: a water tech can be disruptive on four fronts, creating a market, improving performance, cutting costs, or improving the user experience, and the earlier you are, the fewer of those you’re allowed to touch at once. Nala touches exactly two. It improves performance, by handling organics and chlorine that choke polyamide, and it cuts costs, by that 24%. Two, which is the ceiling I’d give a company this young. It is not also trying to invent a new market or reinvent how plants are operated, and that discipline shows up in the fundraising.

The go-to-market matches the money. Nala is starting in industrial wastewater, the semiconductor, textile, and mining streams that are loaded with the organics polyamide hates, where a customer feels the pain sharply enough to try something new, and where you don’t need to dislodge a giant to win the job. Manufacturing is deliberately asset-light: Nala makes its own polymer, coats a sourced substrate, and hands the sheet to a contractor to roll into modules, with, as Sue points out, no waste streams to dispose of at the end. It’s a company built to survive the twenty-year adoption clock rather than to sprint at it. There’s an exit shimmering somewhere out there too, and I’ll admit I floated the idea on the show that a private-equity-owned membrane major might one day want Nala as the premium “sparkle” on a commodity product, though that one is my speculation, not a plan on anyone’s desk.

Frequently asked questions

What is Nala Membranes?

A North Carolina startup, co-founded by CEO Sue Mecham and Dr. Judy Riffle, that has developed the first new reverse osmosis membrane material in over 40 years, a sulfonated polysulfone thin film composite.

What is a sulfonated polysulfone membrane?

A reverse osmosis membrane whose salt-rejecting layer is made from sulfonated polysulfone rather than the industry-standard polyamide. It has a smoother, more chlorine-tolerant surface, which reduces biofouling and allows aggressive chlorine cleaning.

Is Nala’s membrane really chlorine-tolerant?

Yes. Nala reports tolerance from drinking-water-level doses up to 10,000 ppm of sodium hypochlorite for cleaning, where standard polyamide membranes degrade on contact with chlorine.

How much has Nala Membranes raised?

About $15.15 million across five disclosed rounds, according to the Leviathan funding database, with a further roughly $5 million priced round open at the time of the interview.

How is Nala different from ZwitterCo or Aqua Membranes?

ZwitterCo coats a zwitterionic layer onto polyamide and Aqua Membranes prints spacers around existing membranes; both improve the incumbent. Nala replaces the separating material itself.

The one thing I’d watch

If you want to know whether this is the rare water-tech disruption that sticks, don’t watch the chemistry, which already works, and don’t watch the funding headline. Watch for two things: real, paid industrial-wastewater installations that survive a full cleaning season, and a strategic lead investor writing the check that says a serious player wants this material to exist. Get those, and the twenty-year clock starts running in Nala’s favor. As Sue puts it, the whole point is to make reverse osmosis cheaper and simpler so it can do what it’s supposed to do, and that’s a fight worth losing sleep over. The full conversation, chlorine chemistry and all, is the episode.

The post The First New Reverse-Osmosis Membrane in 40 Years appeared first on (don't) Waste Water.

I keep a list of every company trying to pull lithium out of water instead of rock, and right now it runs to about forty names. The money on that list is overwhelmingly American and overwhelmingly large: Lilac Solutions has raised north of $300 million, EnergyX more than $130 million, and both spent it the conventional way, buying their own lithium sites to prove the technology on. Evove, the British outfit whose pilot I drove out to a muddy County Durham field to see this spring, has raised under $13 million in seven years and owns no lithium asset at all. It’s also the one that, in October 2025, convinced Japan’s Kurita Water Industries to take exclusive global rights to its technology and become its largest shareholder. So here’s the question worth your time: how does the company that raised the least, and owns nothing, get validated first?

Full disclosure before I answer it: I’ve been kicking the tires on Evove for years, since my own LeckerLithium experiments and an earlier conversation with the company, and I bumped into Andrew Walker, their CCO, in Amsterdam, where he invited me up to Newcastle to see the pilot for myself. So I went and stood in the field. But the reason I think this is worth an article rather than just an episode is what the numbers around Evove say once you line them up against everyone else chasing the same prize, which is a view you only get if you’ve been tracking the whole field.

Who’s actually winning the money race in lithium-from-water?

Almost nobody you’d expect. When I sort my direct-lithium-extraction list by capital raised, the top of the table is a wall of American cheques: Lilac Solutions at over $318 million, Energy Exploration Technologies (you’ll know them as EnergyX) at $134 million, then Canada’s Summit Nanotech near $90 million and Mangrove at $85 million. Evove sits a long way down that column at $12.95 million across five rounds since 2018, which puts a British company with one of the most-watched DLE pilots in the world eleventh on my list by money raised.

Two things jump out of that table once you sit with it. The first is a quiet naming pattern: a striking number of these companies started life as water businesses and rebranded toward the shinier word. Mangrove Water Technologies became Mangrove Lithium. Evove itself used to be G2O Water Technologies. The water people worked out, before the market did, that brine treatment and lithium extraction are close to the same job. The second is that Britain has quietly grown a whole DLE cluster, because alongside Evove my list carries Seloxium, CleanTech Lithium, WaterCycle Technologies and Salinity Solutions, none of them household names, all working the same seam (I’ve profiled one of them, how Salinity Solutions halves the energy of squeezing water out of any stream).

So why did the smallest serious player win Kurita?

Because Evove made a different bet with its money, and the bet is the story. Look again at the companies above it on the funding table and you’ll notice most of them did the same thing with the cash: they bought a lithium asset, a deposit or a site of their own, so they’d have somewhere to prove the technology and, eventually, a resource to sell (it’s how Standard Lithium and Adionics have played it). Walker is blunt that Evove deliberately refused to play it that way.

Buying a deposit is what turns a $13 million company into a $300 million one, because resources are expensive and slow. Evove stayed a technology licensor instead, selling its membranes and coatings and even its 3D-printing know-how to whoever is building the plant, and partnering with an asset owner (Northern Lithium) rather than becoming one. That’s the difference between a mining mindset and a water one, and it’s the whole reason a small balance sheet could get this far.

I’ll admit this is catnip for me, because I’ve been arguing a version of it across my whole lithium series, from the evaporation ponds of Salta to the DLE startups you trip over walking through Vancouver: strip away the mystique and direct lithium extraction is a water-treatment plant that happens to output something worth $15,000 a tonne, which is the whole case I’ve made for water technology in lithium.

Does the technology actually deliver?

This is where the muddy field earns its place, because an asset-light story collapses the moment the technology underperforms on someone else’s site. Between January and April 2025, Evove ran a 1:15-scale demonstration plant with Northern Lithium at Ludwell Farm in County Durham, on real brine pumped from under the North Pennines, and the published results held up: up to 92% end-to-end lithium recovery, an intermediate at 96.5% purity, and calcium and magnesium pushed below the 5-parts-per-million line where the instruments stop finding them (Evove, “DELiVERED,” October 2025).

The 96.5% is the number that matters, and here’s why, because it’s easy to skate past a purity figure. Walker reckons the intermediate most DLE outfits publish lands around 80 to 82% pure. Evove came out of this pilot at 96.5%, and that gap is money rather than bragging, because the closer your intermediate starts to battery grade, the less you spend dragging it the rest of the way. One of Evove’s conversion partners put real figures on it: starting from the cleaner Evove stream cut their downstream conversion cost by roughly 25% on capex and 22% on opex.

How it gets there is the divalent removal up front, stripping the calcium and magnesium out with its nanofiltration membranes before the lithium ever goes for polishing, and that same cleanliness is what lets Evove recycle its water and regenerate its own acids and bases on site, the basis of its zero-water and zero-chemical-footprint claims. One number you may have seen needs a quick correction, though: the 99.1% that’s been attached to this story is the selectivity of Evove’s Separonics membrane on a hexadecane rejection test, not a lithium-purity figure. The membrane is extraordinarily selective, the lithium results are the 92% and the 96.5%, and conflating the two is exactly the kind of thing that makes an investor distrust the rest of your deck. I’d add my usual asterisk to “zero footprint” too, since it’s always more site-specific than a pitch slide admits, but as DLE goes this is the cleanest version I’ve looked at.

What did Kurita actually buy?

Not a stake, a chokehold. In October 2025 Kurita Water Industries completed an investment that made it Evove’s largest shareholder and, more tellingly, handed it exclusive global rights to use Evove’s DLE technology (Kurita Water Industries, October 2025). In the same announcement, Northern Lithium, Kurita and Evove committed to a three-way plan for commercial UK lithium starting end of 2027, at 500 tonnes a year and ramping past 20,000 tonnes a year by 2035 (PRNewswire, October 2025). So the modular plants get built and manufactured by one of the largest water-treatment companies on earth, while Evove keeps being the technology inside them. For an asset-light licensor, that’s the dream customer, and it’s not the only Japanese name circling: Walker also described an offtake-and-project-finance tie with a trading house he could only call a $100-billion-turnover company.

What I’d flag for an investor is the pattern, not the single deal. The serious money entering DLE from the water side is strategic, not venture, with Kurita buying into Evove and Veolia already running DLE membranes at Centenario in Argentina. The water majors have decided lithium is their adjacency, and they’re shopping for the technology rather than building it, which is precisely the exit a company like Evove is built to be.

What could still go wrong?

Plenty, and I’d be selling you the pitch deck if I skipped it. Asset-light cuts both ways: leaning on Northern Lithium and Kurita gets Evove to scale cheaply, but Evove no longer fully controls its own destiny, and Walker himself calls the partner route “a lot more risky.” Manufacturing is the other open question, because he’s refreshingly candid that churning out these 3D-printed ceramic modules at volume is still unproven, and he’s watched additive manufacturing over-promise before. And the capital math hasn’t gone away just because Kurita showed up: water-tech venture money is thin, hardware is unforgiving, and one large strategic backer is not the same as a deep market of investors. Hold the 92% and the 96.5% in one hand and those three in the other.

Why this matters now

Because the supply chain is the whole game. China spent two decades building a near-monopoly on lithium-processing technology and in 2025 began enforcing export curbs on exactly that know-how, which is what turns a working extraction line in a Durham field from a science fair into a strategic asset. Evove’s answer to the obvious objection, that a scattered Western industry can’t catch up, is counter-intuitive and the reason I keep thinking about it.

Three years from now, if Northern Lithium’s commercial plant comes online as planned, it won’t look like a mine. It’ll look like a water-treatment facility that happens to produce one of the most valuable materials on earth, which is either a quietly radical idea or the most obvious one going, depending on whether you came up through mining or through water. You can probably guess which side of that field I was standing on.

The full conversation with Andrew Walker, plus the walk around the Northern Lithium site, is in the episode embedded above. And I dug into the wider water-meets-lithium thesis across my newsletter, if you want the map the rest of this sits on.

Frequently asked questions

What is direct lithium extraction (DLE)?

A family of processes that pull lithium straight out of brine with membranes, sorbents or ion exchange, instead of evaporating brine in ponds for months or mining hard rock. It’s faster and uses far less land and water, which is why the water-treatment industry has moved into it.

What is Evove?

A UK company, formerly G2O Water Technologies, that makes graphene-oxide-coated reverse-osmosis and nanofiltration membranes plus 3D-printed membrane spacers, and applies them to direct lithium extraction and industrial water treatment. Its advanced filtration line is branded Separonics, commercial launch planned for 2026.

What did Evove’s Northern Lithium pilot achieve?

At the County Durham demonstration in early 2025: up to 92% end-to-end lithium recovery, 96.5% purity for the intermediate lithium chloride and sulfate, divalent ions (calcium, magnesium) below 5 parts per million, across more than 300 hours and 78 million data points.

How much has Evove raised, and who backs it?

About $12.95 million across five rounds since 2018, including a $6.9 million Series A in 2023 led by At One Ventures. In October 2025 Kurita Water Industries became its largest shareholder and took exclusive global rights to its DLE technology.

How does Evove compare to other DLE companies?

By capital raised it’s far smaller than leaders like Lilac Solutions (over $300M) or EnergyX (over $130M); it sits about eleventh on my list of forty. Its differentiator is the asset-light model: it licenses technology and partners with asset owners rather than buying lithium deposits of its own.

Is Evove’s lithium battery-grade?

The pilot produced a high-purity 96.5% intermediate; battery-grade lithium carbonate needs 99.5% or above, reached in a downstream conversion step. Evove has separately made around 2 kg of battery-grade lithium carbonate above 99.5% purity at its own test centre.

Who is Andrew Walker?

Evove’s CCO, or Chief Commercial Officer. He came into water from additive manufacturing, which is where the company’s 3D-printing expertise originates.

Sources

1. Evove, “DELiVERED: onsite demo DLE plant for Northern Lithium,” 2025. evove.tech/dle-onsite-demo (retrieved 30 June 2026).
2. Kurita Water Industries, “Kurita Advances Strategic Alliance with Evove Ltd.,” 15 October 2025. kurita-water.com.
3. Northern Lithium / PR Newswire, “Northern Lithium announces partnership with Kurita and Evove,” 15 October 2025. prnewswire.co.uk.
4. (don’t) Waste Water, S13E5 with Andrew Walker, Evove. youtube.com.

The post Evove Raised $13M. Its DLE Rivals Raised 25x That. Kurita Picked Evove. appeared first on (don't) Waste Water.

# Why Specialist Water Funds Are Finally Emerging: The Cycle H2O Bet

Here is a number that should bother any investor: by 2050, roughly a third of the world’s economy, on the order of $70 trillion, is on track to be exposed to serious water stress. A planet that cannot run without water. And yet, for every $1,000 that venture capitalists put into startups, only about one dollar reaches it. The whole sector has produced exactly one unicorn. That is the asymmetry: enormous dependence, rounding-error funding. So it is worth asking why a man who spent thirty years helping General Electric turn renewable energy from a tree-hugger curiosity into a multi-billion-dollar business just bet his next act on water. His name is Simon Olivier, and the fund is Cycle H2O, a C$30-million Quebec water fund co-managed by cleantech investor Cycle Capital and water-equipment group H2O Innovation. In its first months it wrote three cheques. Here is what that bet reveals.

Why does water get only $1 of every $1,000 in venture capital?

Start with the scale of what is at stake. The World Resources Institute reckons that by 2050, around 31% of global GDP, some $70 trillion of economic activity, will be exposed to high water stress, up from 24% in 2010. Water is not a niche; it quietly underwrites about a third of the economy. Now look at what flows back. Because I am fun at parties, I once summed up what Global Water Intelligence publishes every year about money going into water startups: $325 million in 2020, $470 million in 2021, $650 million in 2022. Real growth, until you set it against global venture capital over the same years ($345 billion, $681 billion, $445 billion) and watch water’s share crawl from 0.09% to 0.14%. Round it however you like: roughly one venture dollar in a thousand reaches water, to protect a third of the world’s economy.

That is the asymmetric bet in one breath. And the whole sector has produced exactly one unicorn, Gradiant, which my Leviathan database now clocks at a US$2 billion valuation after its May 2026 Series E. One. In a sector the planet depends on. When the gap between how much something matters and how much capital chases it gets this wide, an investor’s instinct should not be “stay away,” it should be “why, and for how long?”

Venture capital is money invested in young, unproven companies in exchange for equity, betting that a few big winners pay for the many that fail. A unicorn is a startup valued above $1 billion before it goes public. Water has produced exactly one: Gradiant.

The picture has improved at the top line lately. Cleantech Group still measures water at under 1% of all early-stage cleantech investment, but separate PitchBook figures (via Earth Capital) put 2023 at a record US$863.9 million before 2024 settled around US$768.2 million. So the pool is bigger than it was when I first ran my numbers. It is still a puddle next to what depends on it. And that puddle is exactly where Simon Olivier decided to go swimming.

A 30-year energy bet, now placed on water

To understand the bet, you have to understand where Simon comes from, because his whole thesis is a pattern he has watched play out once already. He spent three decades at General Electric, most of it building the renewable energy business in North America back when, as he puts it, “our only friends were some tree huggers” and nobody on Wall Street would pick up the phone. That business is now worth billions. He thinks water is sitting where renewables sat 25 years ago, with one telling difference that he keeps coming back to.

That line is the hook of the whole episode. In energy, GE spent billions chasing substitutes: wind and solar to replace coal, gas and oil. In water, there is no substitute. There is no Plan B molecule. Which means, in Simon’s reading, the stakes are higher (get it wrong and there is no backup) but the eventual prize is bigger, because water quietly fuels more of the industrial economy than oil and gas do. It is the kind of reframing that only lands if you have watched an unfashionable sector become fashionable before. He has.

The water-energy nexus is the tight coupling between the two: it takes energy to move and treat water, and water to produce energy. Expertise in one increasingly transfers to the other.

Inside Cycle H2O’s three-headed, de-risking structure

Here is the mechanics, because the structure is the actual innovation. Cycle H2O is a C$30-million fund that writes first cheques of roughly C$0.5 to 3 million, aiming to back at least twelve companies inside its first four years, chosen from a pipeline Simon says runs to about 400 names. The fund held its initial close in June 2024, anchored by Investissement Quebec. None of that is unusual. What is unusual is who sits at the table.

Cycle H2O has three partners, and that is the point. Cycle Capital is the largest Canadian cleantech venture firm, bringing the money and the track record of running an early-stage fund. H2O Innovation, a water group operating in around 75 countries (and the subject of its own 25-year acquisition story I unpacked here), brings something money cannot: market intelligence. When a deal lands, H2O Innovation can tell the fund “this is a good deal” or, just as valuable, “this is not as good a deal as you think it is.” Then, once the cheque clears, it opens doors and helps the startup skip the queue.

To de-risk an investment is to deliberately lower the chance it fails, here by buying in expert eyes on the technology and a built-in route to customers. A fund’s first cheque (or ticket size) is the amount it puts into a company’s early round; follow-on money is what it keeps in reserve to reinvest later.

Simon calls this his moat, and he is planning to keep it for Funds 2 and 3. He is also clear about what the fund is not: it will not touch infrastructure plays, which are too capital-intensive and too slow. The bet is on technology, hardware and software, at the earliest stage where, in his words, “there is more impact for investment” even though it is “the most risky space to be in.”

Where did Cycle H2O place its first bets?

This is the part no one else has, so let me lay it out plainly. Pull the disclosed rounds from my Leviathan database and you see exactly where Cycle H2O’s first money went: three Quebec startups, each solving a “market fundamental” rather than chasing a regulation.

Take the first one. Cycle H2O co-led a C$2.5-million round (about US$1.75 million) into BioAlert Solutions, which makes an on-site sensor that detects Legionella in water in three or four hours instead of the weeks a lab takes. The timing makes his case for him: the week before we recorded, New York City had a Legionella outbreak that hospitalized over 100 people and killed five, and London, Ontario had another that killed two. “Right now the phone of Bio Alert is ringing off the hook,” he said. A “nice to have” turning into a “need to have.” The second cheque went to RegenEAU, which pulls heat back out of the water draining from showers and laundry to pre-heat the incoming supply, and which just signed a commercial deal with Engie in Paris to crack the European market. The third, into Ecofilter Tek, backs regenerable resins that capture PFAS, the “forever chemicals” other founders are racing to destroy, without creating hazardous waste.

Syndicate is the group of investors who fund a round together; the lead (or co-lead) sets the terms and writes the biggest cheque while the others follow. A round is oversubscribed when more money wants in than the company is raising.

One honest note, because I keep my own database honest. The disclosed paperwork shows three Cycle H2O cheques. On the show, the count creeps to four investments in four companies inside six months, and Simon himself refers at one point to “two initial investments” that came in oversubscribed. The fourth is referenced but not publicly disclosed, so I am naming the three I can stand behind and flagging the rest. The shape of the bet is what matters: detection, water-energy efficiency, contaminant removal, all early, all local, all syndicated.

How do you value a water startup without getting burned?

If you have never priced a startup, this is where it gets interesting, because valuation is where good intentions go to die. Simon’s method has a name: the Goldilocks valuation. The fair number, he says, is the one where “the entrepreneur is not happy and we’re not happy” at the same time. To find it, the team maps two or three future funding rounds against a likely exit five years out, then works backwards to today’s price.

The reason to bother is defensive. Price a company too high today and you set it up for a down round later, and that is the thing every founder should fear. Simon is watching it happen across water right now: the PFAS category, he notes, is so hyped that valuations are inflating, and post-COVID multiples that “were through the roof” are correcting into bridge and down rounds. Mapping the exit first is how he avoids handing a founder a number that feels great in year one and dilutive in year three. It is also, he admits, a sneaky relationship test: how you argue about valuation tells you how you will argue about everything else. If you want the cautionary tale of how rare water exits actually are, I went down the rabbit hole of 600 water bets and almost no exits here.

A down round is a new funding round priced below the previous one, which punishes early backers and staff. It is dilutive because existing shareholders own a smaller slice afterwards. A bridge round is emergency money raised between proper rounds, usually a warning sign. An exit is how investors finally cash out, by acquisition or IPO.

Can water actually deliver venture returns, and how long does it take?

Now the bear case, stated plainly: time. Water has a reputation for taking forever, and Simon does not dodge it. The whole return, he says, hinges on the clock: “if it takes them 10 years … our return won’t be that great. But if we can do that over a shorter period of time, call it 4 or 5 years, our returns will probably exceed any of the other asset class return.” So is the 12-to-16-year reputation real? Sort of. A Wageningen University study by Paul O’Callaghan, which I keep coming back to, clocked the journey from innovation to mainstream at about 14 years for a technology that wins on value alone.

But here is the hopeful half of that same study, and it is exactly Simon’s strategy in disguise. When a crisis or a regulation forces adoption, the cycle roughly halves, to about seven years. That is why a Legionella sensor whose phone rings off the hook after an outbreak is a smarter bet than a clever gadget nobody urgently needs: the crisis compresses the timeline. Simon frames the broader arc the way he saw it in energy, where “when we first started, our only friends were tree huggers” and now billions pour in. He thinks the same maturing is coming to water on a five-to-ten-year horizon, “driven by more exits.” Which is the catch-22 of the whole sector, and why the early funds matter: you need exits to attract money, and money to create exits. (For the running tally of where that money actually is, I keep a state-of-water-funding scoreboard here.)

What earns a cheque, and what earns a quick no

If you are a founder reading this, here is the cheat sheet. The fast no comes when a company has no defensible barriers to entry (Simon puts patents and IP squarely in that box), when it is a me-too product with no real differentiation, or when there is no clear road to making money. Tick all three the wrong way and it is, in his words, “a clear no.” The fast yes tends to go to founders Cycle H2O already knows, often for years, through the ecosystem it built. BioAlert came up through Cycle Capital’s own accelerator before it ever got a cheque.

The most counterintuitive thing he said is about the order of money. Asked how a water startup should fund itself, he ranks grants and other non-dilutive money first (you give up no ownership for it), then profitability, and only then venture capital. Coming from a VC, that is refreshingly honest. And when Cycle does write the cheque, it almost never goes alone: it builds a syndicate of co-investors, and its first rounds came in oversubscribed, which Simon reads as a quiet signal that there is money on the sidelines waiting for someone who knows the sector to lead.

Non-dilutive funding is money (grants, government programs, revenue) that does not cost you equity. Barriers to entry are what stop a competitor from copying you tomorrow, the patents and hard-won IP that make a “moat.”

Why are specialist water funds finally emerging?

Step back and Cycle H2O stops looking like a one-off and starts looking like a pattern. Asked who else is in the water, Simon reels off the names without hesitating: Burnt Island Ventures, PureTerra, Emerald, HG Ventures, Mazarine, Echo River, plus a wave of generalist funds now hiring water expertise specifically to de-risk their own decisions.

A specialist fund invests only in one sector (here, water) and competes on depth; a generalist fund spreads across many and competes on reach. The thesis of this episode is that water has finally grown deep enough to reward specialists.

The numbers back the pattern. Burnt Island raised an oversubscribed US$30-million Fund I and is reportedly out raising US$50 million for Fund II; PureTerra is targeting around €80 million. And a generalist climate house like Cycle Capital, which runs seven funds, deliberately spinning up a dedicated water vehicle is the same signal from the other direction. (I sorted the whole zoo of who-invests-in-water into three tribes in my newsletter, if you want the field guide.) The honest truth is that a lot of these funds exist because the rest of us could not even find the deals: I got tired of stitching together Crunchbase, overpriced reports and a guy who knows a guy, so I built the water-deal map into my Leviathan database. When the plumbing for finding and pricing water deals finally exists, the specialists can show up. They are showing up.

Frequently asked questions

Why don’t VCs invest in water?

Historically, only about one venture dollar in a thousand reached water, against a reputation for slow, decade-plus adoption, and the sector has produced just one unicorn (Gradiant, valued around US$2 billion). Cleantech Group still measures water at under 1% of early-stage cleantech investment, though the absolute totals are now at record levels. The gap between water’s economic importance and the capital it attracts is the whole story.

Is water a good venture-capital investment?

Simon Olivier’s case is that water is an undervalued, finite resource whose price can only rise, and that returns hinge on time-to-scale: back the right company and reach an exit in four or five years and the returns can beat any other asset class.

What is Cycle H2O?

A C$30-million Quebec-based water venture fund, co-managed by Cycle Capital and H2O Innovation and led by Simon Olivier, writing first cheques of roughly C$0.5 to 3 million into early-stage water technology companies.

How does Cycle H2O de-risk early-stage water deals?

Through a three-partner structure (a cleantech VC, a global water group for market intelligence, and the fund team) plus a habit of only backing founders it already knows and building a co-investor syndicate around each deal.

How long does water technology take to scale?

Research by Paul O’Callaghan puts value-driven water technologies at about 14 years to reach mainstream adoption, dropping to roughly 7 when a crisis or regulation forces the issue.

How do investors value an early-stage water startup?

Cycle H2O uses a “Goldilocks valuation,” mapping two or three future rounds against a likely five-year exit and working backwards, specifically to avoid the down rounds that punish everyone later.

The bet, paid forward

If water really is sitting where energy sat 25 years ago, unfashionable, substitute-free and slow, then the funds writing the awkward first cheques today, into a Legionella sensor, a shower-drain heat exchanger, a PFAS resin, are the ones that will look obvious in hindsight. Simon Olivier has watched a sector go from tree-huggers to billions once before, and he is betting his second act that water is next. The interesting question is not whether water VC stays at one dollar in a thousand. It is who is positioned for the moment it does not.

Listen to the full conversation with Simon Olivier on (don’t) Waste Water, S13E19. And if you want the water-investing field notes between episodes, my newsletter is here.

Sources

1. Economic exposure to water (~$70T / 31% of global GDP by 2050, from 24% in 2010): World Resources Institute (WRI Aqueduct), “25 Countries… Face Extremely High Water Stress,” wri.org/insights/highest-water-stressed-countries (2023). Retrieved 2026-06-28.
2. Water VC share / “1 in 1,000”: Global Water Intelligence annual venture tallies ($325M 2020, $470M 2021, $650M 2022; 0.09%->0.14%), as compiled by Antoine Walter / Leviathan (first-party). Retrieved 2026-06-28.
3. Gradiant = water’s one unicorn, ~US$2B valuation at its May 2026 Series E (and Series D May 2023): Leviathan, my water funding database (funding_rounds), verified 2026-06-28; Series E valuation per founders’ interview (raise amount undisclosed).
4. Water <1% of cleantech early-stage: Cleantech Group, "The State of the Water Sector," cleantech.com/the-state-of-the-water-sector/ (2025). Retrieved 2026-06-28.
5. Water VC record totals: PitchBook via Earth Capital, “Water Tech 2025: Innovation Meets Urgency,” earthcapital.net/water-tech-2025-innovation-meets-urgency/ ($863.9M 2023; $768.2M 2024). Retrieved 2026-06-28.
6. Adoption ~14 yr / ~7 yr: P. O’Callaghan et al., “Analysis of adoption rates for Needs Driven versus Value Driven innovation water technologies,” Water Environment Research (2019), DOI 10.1002/wer.1013. Retrieved 2026-06-28.
7. Cycle H2O fund (C$30M, C$0.5-3M tickets, June 2024 close, Investissement Quebec anchor): Cycle Capital press release, cyclecapital.com/en/2024/06/26/cycle-h2o-holds-initial-close-… (2024). Retrieved 2026-06-28.
8. BioAlert C$2.5M co-led GreenSky + Cycle H2O (Mar 2025): BetaKit, betakit.com/bioalert-secures-2-5-million-… (2025). Retrieved 2026-06-28.
9. Cycle H2O / Cycle Capital portfolio rounds (BioAlert, RegenEAU, Ecofilter Tek, Fibracast): Leviathan, my water funding database (funding_rounds), verified 2026-06-28.
10. Peer fund sizes (Burnt Island $30M->$50M, PureTerra €80M): public reporting, retrieved 2026-06-28.

The post Why Specialist Water Funds Are Finally Emerging: The Cycle H2O Bet appeared first on (don't) Waste Water.

AqueoUS Vets is built for the PFAS market as it actually is, not as a chemist would wish it were. Destroying forever chemicals may be the only way to truly end them, as removal "just" concentrates the problem and moves it down the road. But nobody pays the destruction premium yet, because the rules only ask utilities to get PFAS out of the drinking water, and "good enough for the regulation" is good enough for whoever signs the check. So AqueoUS Vets, founded in California back in 2015, does exactly one thing: it pulls PFAS and other contaminants of emerging concern out of water at municipal scale, with granular carbon and ion-exchange resin. That single focus carried it from one plant in Redding to its 120th project, the systems behind the largest plant of its kind in the country, and, in 2022, a bet from Bain Capital's impact fund. So why does removal win today, and what happens the day someone finally has to pay to destroy?

AqueoUS Vets, the PFAS pure-play

Founded in California in 2015, AqueoUS Vets is what Mirka Wilderer, its CEO at the time of our 2025 conversation, calls a pure player: it removes PFAS and other contaminants of emerging concern from drinking water for municipalities and utilities, and it sells nothing else. The name itself is a tell, Aqua plus US for the American focus, and "Vets" for the water veterans who started it. Where most of the field carries a broad catalogue, AqueoUS Vets carries one hammer and looks for the right nails.

Now, "we only do one thing" is easy to say and hard to make pay. What makes it work is a set of four design principles Mirka walks through on the show: optimize the media for the actual contaminant on the actual site, control corrosion with the right materials, design for low head loss so you spend less energy pushing water, and make the systems easy to operate and maintain. Add it up and you get the promise that matters to a utility budget, low capital cost and low running cost, from a company that has nothing else to sell you. That is the whole pitch, and as you will see, it is also the whole reason a private-equity impact fund came knocking. what PFAS actually are and why they are so hard to remove

Ion exchange or carbon: how do you actually remove PFAS, and at what cost?

If you ask the EPA how you take PFAS out of water, you get four "best available technologies": granular activated carbon (GAC, basically a very thirsty charcoal that the molecules stick to), anion exchange (IX, a resin that swaps the contaminant for a harmless ion), reverse osmosis, and nanofiltration. AqueoUS Vets plays in the first two, carbon and ion exchange, and it stays deliberately neutral about which one a site gets.

That neutrality is pure economics. Carbon is cheaper to buy but you change it out more often. Ion-exchange resin costs more up front, but here is where it gets interesting, so let me walk the numbers. A resin bed will treat roughly ten to twenty times the volume of water that a carbon bed handles before it is spent , which means far fewer change-outs, far less downtime, and it tends to hit the very low limits more reliably. Stretch that across a plant's life and the picture is genuinely wide: independent life-cycle reviews put the running cost of PFAS treatment anywhere from about three cents to twenty-eight dollars per cubic metre of water, depending on the source water and the technology. So "which media" really comes down to a site's water and a utility's budget, which is exactly why selling both, and picking per site, is the smart commercial position.

Why does the market pay to remove PFAS, not destroy it?

Here is the contrarian core of this story, and it is an economics argument, not a chemistry one. Removing PFAS does not actually get rid of PFAS. It "just" moves them, off the water and onto spent carbon or resin that now has to be hauled away and, eventually, dealt with. The only way to truly end a PFAS molecule may be to break it, and breaking that very long carbon bond is hard, energy-hungry, and expensive. I dug into one such destruction route in my newsletter, asking whether anyone can really destroy PFAS for ten cents a gallon, and the honest answer is "not yet, not at the price the market wants." can they really destroy PFAS for ten cents a gallon

So why does almost all the money still flow to removal? Because the rule only asks for removal. A utility is told to get PFAS below a legal limit in the water it delivers, and once it has done that, it has complied. Nobody hands it a second budget to then destroy what it captured, and no operator volunteers to pay that premium when "out of the water" already satisfies the regulator. My own view, which I have laid out before, is that destruction is where this has to end up, otherwise we are just kicking the can. why I lean toward destroying PFAS, not just removing it But realistically, someone has to pay for that can to be crushed, and until a rule mandates or rewards destruction, removal is simply the rational purchase. AqueoUS Vets understood this and built for the world as it is, staying, in Mirka's words, destruction-agnostic, even concentrating PFAS with its own foam-fractionation system so that whatever destruction step does eventually arrive has less to chew on.

The 120-project track record, and the largest plant of its kind

The track record is the moat, and it is unusually concrete. AqueoUS Vets numbers its projects, and on the show Mirka puts the count plainly: they are "currently executing projects in the 120th number," and "north of 100" installed across the country, from Redding in California to Stuart in Florida to a first job in Rhode Island. The reference project that put them there is the one in Yorba Linda, where they supplied the 27 ion-exchange systems behind what the water districts call the nation's largest ion-exchange PFAS treatment plant, a facility with 22 resin vessels and a 25-MGD booster station, MGD being million gallons a day, running around 19 of them in practice. They did not own that plant, the utilities do, but they built the part that takes the PFAS out.

What makes 120-plus believable rather than a slide is the boring part, speed. Because the systems are pre-fitted at the factory before they ship, an install is measured in hours, not the weeks a built-on-site job would take, and for a utility staring down a compliance deadline, that is the difference between making it and missing it. where these treatment trains sit in the bigger picture of membranes and media

Why did Bain Capital's impact fund bet on a PFAS pure-play?

This is the part that turns an engineering story into an investor one. In 2022, Bain Capital Double Impact, the firm's dedicated impact fund, took a majority stake in AqueoUS Vets. What makes that notable is not just the name on the cheque, but that, as Mirka tells it, AqueoUS Vets was the first water company, and the first manufacturing company, in that fund. The logic is clean once you say it out loud: an impact fund needs measurable good, and a company whose entire output is "litres of drinking water cleared of a regulated toxin" is about as measurable as impact gets. It also rides a capital wave that is getting harder to ignore. where water-tech capital is actually flowing

Then, in 2023, the bought company did some buying of its own. AqueoUS Vets acquired Dixie Tank, a tank manufacturer, to plant a factory on the East Coast and bring the steel into its own supply chain. For a newcomer to private equity, this is the textbook "bolt-on," a small, strategic acquisition (the tank-maker) tucked under a platform company (AqueoUS Vets) to fix a specific problem, here the lead times and shipping costs of moving big steel vessels across the country. Vertical integration, in plain terms, owning more of your own supply chain so a bottleneck cannot hold your growth hostage. I unpacked how private equity is rewiring water tech like this in a recent newsletter, because the pattern is everywhere now. the PE strategies reshaping water tech

What is the EPA PFAS limit, and what is it doing to the market?

All of this only pays because demand now has a date on it. In April 2024 the EPA finalized a national limit of 4 parts per trillion for the two best-known PFAS, PFOA and PFOS, parts per trillion being roughly a single drop in twenty Olympic pools. Every system that tests over that line suddenly needs a removal plan it did not have the year before. That is the whole market, conjured by a number.

She called it, almost to the letter. By 2026 the EPA had kept the PFOA and PFOS limits exactly where they were, at 4 parts per trillion, an MCL being the maximum contaminant level, the legal ceiling a utility's water has to stay under, while moving to rescind the limits it had set on four other PFAS and pushing the compliance deadline out two years, to 2031. A revision, not an elimination, just as she said. And notice what that limit actually mandates, getting the two compounds out of the water, full stop. It says nothing about then destroying them. Which is the whole reason the removal market is booming while the destruction market waits for a rule of its own, and why a company that does removal, cheaply and fast, is exactly the kind of company a regulation like this calls into being. the invisible threat the regulation is chasing

FAQ

What does AqueoUS Vets do?

AqueoUS Vets is a California company, founded in 2015, that removes PFAS and other contaminants of emerging concern from municipal and utility drinking water, using granular activated carbon and ion-exchange resin systems. It is a pure player, meaning PFAS-style removal is the only thing it sells.

What is the difference between ion exchange and GAC for PFAS?

Granular activated carbon (GAC) is cheaper to buy but is spent faster; ion-exchange (IX) resin costs more up front but treats roughly 10 to 20 times the volume of water before change-out and tends to hit very low limits more reliably. The right choice depends on the source water and the budget, which is why AqueoUS Vets offers both.

How much does PFAS treatment cost?

It varies widely with the water and the technology. Independent 2025 life-cycle reviews put operating costs from about 3 cents to 28 dollars per cubic metre treated, with capital costs from roughly 1 to 51 cents per cubic metre. Ion exchange costs more up front than carbon, but its longer runs between change-outs pull the whole-life cost back down.

What is the largest PFAS treatment plant in the US?

The Yorba Linda facility in California is described by its water districts as the nation's largest ion-exchange PFAS treatment plant, with 22 resin vessels and a 25-MGD booster station. AqueoUS Vets supplied the 27 ion-exchange systems; the plant is owned by the local water districts.

Who owns AqueoUS Vets?

Bain Capital Double Impact, Bain Capital's impact fund, took a majority stake in 2022. AqueoUS Vets was the fund's first water company and first manufacturing company.

What is the EPA PFAS limit?

In April 2024 the EPA set a maximum contaminant level of 4 parts per trillion for PFOA and PFOS, with monitoring by 2027 and compliance by 2029. A 2025 to 2026 reconsideration kept those two limits, moved to rescind the limits on four other PFAS, and proposed extending compliance to 2031.

Is it better to remove or destroy PFAS?

Destroying PFAS may be the only way to truly eliminate them; removal concentrates them onto spent media that still has to be managed. But destruction costs more, and current rules only require removal, so the market overwhelmingly pays for removal today. Destruction scales when a regulation mandates or rewards it.

For all the talk of compliance deadlines, the line from Mirka that stuck with me is that AqueoUS Vets actually ran a purpose exercise with a hundred-year horizon, even though today's mission is simply taking PFAS out of water. The open question was never really the chemistry, because destruction is probably where this has to end up; the real one is whether a rule will ever make someone pay for it. Until then, removal stays the rational bet, and AqueoUS Vets is built precisely for that reality, taking the problem out of the water now and staying patient about the day the destruction money finally arrives. Give the full conversation a listen below, and tell me in the comments which side of that bet you would build.

Subscribe to the (don't) Waste Water newsletter for more like this.

Sources

1. EPA, "Reducing PFAS in Drinking Water with Treatment Technologies" (2024). link
2. AWWA Journal, "The Cost to Remove PFAS: A Review of US Water Treatment Plants" (May 2025). link
3. Life-cycle review of PFAS treatment technologies, ScienceDirect (2025). link
4. Yorba Linda / Orange County Water District, "Nation's Largest Ion Exchange PFAS Treatment Facility" (ACWA, Dec 2021). link
5. Bain Capital Double Impact, AqueoUS Vets portfolio. link
6. "Bain Capital-backed AqueoUS Vets buys manufacturer Dixie Tank Company" (PE Hub, 2023). link
7. EPA, PFAS National Primary Drinking Water Regulation (April 2024). link
8. EPA, "EPA Announces It Will Keep Maximum Contaminant Levels for PFOA, PFOS" + the 2026 compliance-extension proposal. link

The post How AqueoUS Vets Scaled PFAS Removal to 120+ Projects appeared first on (don't) Waste Water.

What is Water-as-a-Service?

Start with the model, because the whole story lives there. Henry is blunt about it: “the technology is not the problem,” he told me, “the delivery model, the business model is the solution to our biggest infrastructure problems.”

In the normal world, a town buys a plant. It borrows the money, hires a firm to design and build it, and then owns and runs it more or less forever. Water-as-a-Service flips every one of those verbs onto the provider. Seven Seas finds the capital, builds the plant, owns it for good, operates it, and you simply buy the treated water, usually a fixed charge that pays down the plant plus a price per cubic meter you actually use. You are not buying a machine, you are buying water, the way you buy electricity. Seven Seas liked the idea enough to trademark the name, WaaS, which tells you they think the model, not the membrane, is the product.

Where it sits: the water delivery-model zoo

“A private company runs a water plant” hides at least six different deals, and the line that separates them is simple: who puts capital at risk, and who ends up owning the thing. At one end is Design-Bid-Build, where the city pays for everything and owns it forever. In between sit the half-measures: Design-Build-Operate, where the city still finances and owns the plant but hires one team to build and run it; and Build-Operate-Transfer, where a private builder fronts the cash, runs the plant for twenty or thirty years, then hands the keys back. Water-as-a-Service is the far end, where the provider pays, owns, and the keys never change hands at all. You just keep buying the water.

If that picture feels abstract, the table below puts the who-pays, who-owns and who-runs of each model side by side.

The real innovation is the deal, not the desalination

Here is the part I find genuinely clever, and it has nothing to do with membranes. The desalination itself is decades-old, widely available technology. The breakthrough is the deal. As Henry tells it, water has always had two camps that refuse to talk to each other: the engineering builders, who can size a pump but freeze when you ask them for an IRR (the internal rate of return, the yardstick for what a project earns), and the project-finance money, which can write the check but often cannot spell reverse osmosis. Water-as-a-Service forces those two into one company that gets paid only when the water flows, which kills the margin each camp would otherwise stack on the other.

And the model compounds. Henry’s real moat is not a plant, it is having done this so often that he no longer needs a fresh financial close, new engineers, or “a new lawyer that tells us how the water-as-a-service agreements work” for every deal. Do it once and it is hard. Do it 200 times and it is a machine.

Why doesn’t the US just do this everywhere?

If the model is this good, why hasn’t every thirsty American city switched? Because of a wall called Design-Bid-Build, built from two materials. The first is law: almost every US state requires public construction to go to the “lowest responsible bidder,” which needs a finished design to bid against, which legally splits design from construction. That split, mandated by statute, is the US municipal default.

The second material is decisive: cheap money. A city borrows through tax-exempt municipal bonds that run roughly 150 to 210 basis points below what a private company pays, topped up by the federal State Revolving Funds (about $133 billion in loans over 25 years) and WIFIA. So a US utility’s own credit is cheaper than any private owner’s, and it rarely needs a private balance sheet at all. Add that about 80% of Americans get their water from a government-owned system, plus a long memory of privatizations that soured (Atlanta handed its water to a private operator in 1998 and took it back by 2003), and you have ground Water-as-a-Service simply cannot occupy.

So where does Water-as-a-Service actually win?

It wins where that wall is thin, and there are three such places. The first is industrial customers: a factory, a mine, or a refinery signs the water contract directly, with no public tender, moving a water plant off its balance sheet so its capital stays in its core business. Henry says these are still “a handful” of his book, but they are the growth leg, and the cleanest pure-play around, Belgium’s listed Ekopak, is built entirely on industrial reuse.

The second is islands and decentralized systems, Seven Seas’ heartland: across the Caribbean and Latin America, where public capital is thin and the cheap-muni market does not exist, a private build-own-operate provider is simply the practical route. Seven Seas is the primary water supplier to the US Virgin Islands, St. Maarten and the British Virgin Islands. The third is anywhere a small, fast, brackish or reuse plant beats a megaproject. Set California’s Carlsbad plant (conceived 1993, opened 2015, around $1 billion) against Henry’s decentralized model, where his crews commission a working island plant in under two months.

The catch: it follows the money, not the thirst

Before you remortgage the house to buy water annuities, here is the catch the brochures skip. A 30-year water contract is only ever as good as the customer signing it. Henry uses a mortgage analogy: “the better your credit rating, the lower your mortgage rate,” and a water deal is no different, because “we need to make sure that we get paid.” So the model needs strong, creditworthy off-takers, which in practice means the US and other wealthy economies, and it struggles exactly where water is scarcest and poorest. The development-finance literature says the same thing in colder language: capital flows to creditworthy buyers, not to need. Water-as-a-Service is a credit instrument first and a water technology second.

There is one tidy exception that proves the rule. The largest market on earth for long-term water-purchase contracts is the Gulf, among the most water-scarce regions there is, but also high-income and state-backed. Scarcity did not unlock it. A guaranteed check did.

Why is a Water-as-a-Service company worth a billion dollars?

Now the part a fund actually pays for. Strip away the water and a book of these contracts is recurring, contracted revenue, locked in for decades, from customers obliged to pay. That is an annuity, and it behaves like a toll road: the predictable, inflation-resistant cash flow infrastructure investors are built to buy. The demand behind it is bottomless: the US alone faces a reported $1.26 trillion in water and wastewater needs over 20 years (US EPA, 2023 to 2024).

Now the arithmetic. In March 2020, Morgan Stanley’s infrastructure arm bought Seven Seas for a reported $500 million. In May 2025, the Swedish investment firm EQT agreed to buy it for a reported $1 billion-plus. By my count, in my own Leviathan database, that is the same asset roughly doubling in five years, while never once ringing a stock-market bell.

What changed in between was not the technology. Henry took a “great company” that had gone “stagnant” and rebuilt its strategy, its team, and a sales pipeline “where before there was none.” Four years, he reminds me, is a nanosecond in infrastructure.

So what did the billion-dollar water exit actually look like?

It looked like a company passed between investors its whole life. Private-equity firms owned Seven Seas through the 2000s. In 2016 its parent, AquaVenture, went public on the New York Stock Exchange under the fitting ticker WAAS, raising about $134.6 million (Renaissance Capital, 2016). In 2020, Culligan took AquaVenture private and carved Seven Seas out, selling it to Morgan Stanley Infrastructure Partners for a reported $500 million (BusinessWire, March 2020). Then, in May 2025, EQT agreed to buy it for that reported $1 billion-plus (EQT, 2025). Four owners across two decades, and the strange part: of those four prices, only the 2016 IPO was ever officially confirmed.

And the exit was not luck. It was designed from the day Henry took the job. When he interviewed with Morgan Stanley, he asked the only question that mattered: what is your exit strategy, and is an IPO an option? They told him plainly it was not. So from September 2021, everyone knew exactly what ending they were building toward, which is roughly how you actually buy a water company and turn a profit.

Who is Seven Seas Water, exactly?

Quick context, because, again, you have rightly never heard of them. Seven Seas Water Group has been treating water for about two decades. Today it runs more than 200 desalination and wastewater plants across the US, the Caribbean and Latin America, from islands like the US Virgin Islands all the way to Peru, with headquarters split between Tampa, Florida and Houston, Texas. Its core trick is brackish-water desalination, taking water that is salty but not quite seawater and making it drinkable, plus wastewater treatment through its AUC division. Not a household name, just the quiet plumbing behind a lot of other people’s taps. Which is exactly the kind of unglamorous, mission-critical infrastructure that hides in plain sight until a fund pays a reported billion for it.

Why do these water companies sell to funds instead of going public?

So if the model is this good, why has Seven Seas never simply floated? Henry’s answer is that public markets are “a cyclical animal,” and that water is tiny by stock-market standards, mostly regulated utilities and the firms selling “pumps, pipes, valves.” Private owners can price the contracted future; public markets mostly price last year’s profit. So the annuity keeps trading privately, between infrastructure funds. Morgan Stanley, then EQT, with Ember, KKR and XPV chasing the same playbook, and the price tags to match: KKR paid a reported $2.07 billion for the environmental group Ecorbit in 2024, while a closer cousin, H2O Innovation, went private for C$395 million. This is water privatization in slow motion. I asked the same question of a far bigger name in 600 private water bets and zero public exits, watched another platform turn bolt-ons into a reported $1.8 billion exit, and mapped the patient money behind it in how HG Ventures became a top-5 water investor. I even sorted water’s investors into three tribes once, because I am, as ever, fun at parties. Subscribe to the (don’t) Waste Water newsletter here.

How to invest in water if you’re not a billion-dollar fund

So can you, personally, own a slice of this? Mostly, no, and it is worth being honest about that. The Seven Seas kind of deal lives behind billion-dollar infrastructure funds with institutional minimums, not a brokerage app. What is actually open to you is the unglamorous public half Henry described: listed water utilities, the big equipment makers, and a handful of genuine water-focused funds and ETFs (an ETF being a basket of stocks you buy in a single click). The recurring water-as-a-service upside, the annuity that EQT just paid a reported billion for, stays almost entirely private. Henry, for what it is worth, defines a “water company” generously, counting even firms that simply help others use less of it, so if you go looking, look wider than the obvious utilities.

The frontier Henry keeps pointing at is the “third leg,” industrial Water-as-a-Service, factories handing their entire water headache to an operator and keeping their own capital for their own business. And my crystal ball still says the one chapter Seven Seas keeps skipping, an actual IPO, is the most likely next one, the very thing the whole sector keeps not doing. Whichever way EQT eventually rings that bell, the lesson holds. In water, the billion-dollar moments rarely arrive with a gong on an exchange floor. They happen quietly, between people who understood the delivery model long before anyone else was listening. Go listen to the full conversation with Henry on the podcast, it is genuinely worth your time, and it will change how you read the next water headline.

Frequently asked questions

What is Water-as-a-Service (WaaS)?

A model where a company builds, owns and operates a water or wastewater plant and sells the treated water under a long-term contract, instead of selling the plant itself. The customer pays for water, usually a fixed charge that covers the plant plus a price per cubic meter, with no upfront capital; the operator carries the financing and the risk. Seven Seas Water trademarked the term.

How is Water-as-a-Service different from Build-Operate-Transfer or Design-Build-Operate?

Under Design-Build-Operate, the public customer finances and owns the plant the whole time and just hires one team to design, build and run it. Under Build-Operate-Transfer, a private developer finances and runs it for 20 to 30 years, then hands ownership back. Under Water-as-a-Service, the provider owns the plant for good and you never own it, you only ever buy the water.

Why doesn’t US municipal water use Water-as-a-Service?

Two reasons. Low-bid procurement laws push cities into Design-Bid-Build, where the public owner finances and owns the plant. And tax-exempt municipal bonds plus federal loan funds make public capital cheaper than any private owner’s, so a US city rarely needs a private balance sheet. WaaS therefore concentrates on industrial customers, islands and decentralized systems instead.

Who owns Seven Seas Water?

EQT Infrastructure, through its EQT Infrastructure VI fund, since its 2025 acquisition from Morgan Stanley Infrastructure Partners. Before that it belonged to Morgan Stanley (2020 to 2025), and earlier to AquaVenture Holdings and its public shareholders (NYSE: WAAS), with Culligan owning the parent briefly in 2020.

What did EQT pay for Seven Seas Water?

It was never officially disclosed. Sources put the enterprise value above $1 billion including debt, on a deal agreed on 22 May 2025, roughly double the reported $500 million Morgan Stanley paid for the same business in 2020.

How big is the water-as-a-service market?

There is no single reliable figure: independent estimates put growth at roughly 7 to 13% a year through the early 2030s, but the absolute market-size numbers vary about threefold between firms. The hard number is the demand behind it: the US EPA puts 20-year US water and wastewater needs at about $1.26 trillion.

How do you invest in water?

For most people, through listed water utilities, water-equipment makers, and water-focused funds or ETFs. Direct stakes in private water-as-a-service operators like Seven Seas are generally limited to institutional investors and large infrastructure funds. —

Sources

1. Primary source: the (don’t) Waste Water podcast, S13E15, “What Does a Billion-Dollar Company Exit Really Look Like?” with Henry Charrabe, CEO of Seven Seas Water Group. youtube.com/watch?v=sd2tCuwMKfk (retrieved 2026-06-13).
2. EQT to acquire Seven Seas Water Group, EQT, press release, 22 May 2025: enterprise value reported to exceed US$1bn including debt; financial details not officially disclosed. eqtgroup.com (retrieved 2026-06-13).
3. Seven Seas Water acquired by Morgan Stanley Infrastructure Partners (reported ~US$500M), BusinessWire, 30 March 2020; Conyers, “US$500 million acquisition of Seven Seas Water.” businesswire.com (retrieved 2026-06-13).
4. AquaVenture Holdings IPO (NYSE: WAAS, ~US$134.6M gross), October 2016, Renaissance Capital / PRNewswire. renaissancecapital.com (retrieved 2026-06-13).
5. Proprietary analysis and deal records: Leviathan, my water M&A database (EQT 2025, AquaVenture 2007, Aguas de Panama 2020 deal records; the reported ~US$500M to ~US$1bn+ step-up), verified 2026-06-13.

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The water sector is not about to crack. It is standing inside an inflection point it has never actually reached before, and that is exactly why it feels so fragile. By my count, 2025 beat every record that matters: the bench of private-equity-owned water platforms grew from 42 companies in 2015 to nearly 600, private equity ran 165 water acquisitions in a single year, and on day one of the Global Water Summit, the sector’s first and only unicorn, Gradiant, doubled its worth to a $2 billion valuation. Every load-bearing part of a self-sustaining capital machine is finally in place, except the last one. There is no IPO pipeline. And a machine that cannot complete a single lap does not break from too much money pouring in. It breaks from money that cannot get back out. So the real question is not whether water tech is overheating. It is whether anyone can finally cut the cord.

So is the water sector actually about to crack?

Here is the honest answer, and it is the one I went to Madrid to test: no, it is not cracking, but it is closer to the edge than it has ever been. Of the five steps a water company climbs from idea to established business – starting up, raising early rounds, fuelling growth, handing over to private equity, and finally exiting – the first four all beat their records in 2025 and early 2026. Only the fifth, the exit, is missing. That is not a sector overheating. That is a sector that has built every part of a machine except the door the money leaves through.

I think about a water company the way I think about a yo-yo. A founder gives it the first flick of the wrist, and with enough money, brains and muscle it spins faster and faster – that is venture capital, then growth capital. But a yo-yo always has a string attached, and the string eventually calls it back. In my metaphor, that is a private equity fund: it sends the company down on a scaling journey, then reels it in to sell to a bigger fund that flicks it harder still. Only when someone finally turns that yo-yo into a water wheel – a full-scale, self-sustaining company – can the cord be cut. That final player is the riddle. And the riddle is what decides whether the whole thing holds.

So I went to find the players themselves. Over three days in Madrid I got to sit down, one to one, with six of the people who actually move this money – the founders, the funds, and the bankers who broker the exits – plus a dozen more conversations off the record. Almost none of what follows was said from a stage. It is the candid version, the kind you only get sitting across a table, and it is the reason I think the picture is both more exciting and more fragile than the press releases let on.

What does the water capital chain actually look like in 2025?

On the private-equity side, the share of all water deals run by PE buyers basically doubled in a decade, from around 14% in 2015 to 37% last year, with 165 PE-led acquisitions in 2025 alone – the most on record. And the shape is telling: 80 of those 165 were sub-$10 million targets. High velocity, low ticket. The loop is spinning faster than ever, but with smaller cheques. The early stages tell the same story of abundance: by my count there were 108 funding rounds along the early steps in 2025, against 33 in 2018, and the specialist funds writing those checks are now raising faster than the companies they back.

It is not just the venture end filling up. XPV, on the later-stage side, closed two new vehicles in 2025 worth $625 million and pushed past a billion dollars under management. Thematic European money is arriving for the first time too – Summa Equity beefed up a whole water team this year. And the biggest strategic in the world, Xylem, is quietly underwriting the early stage through a fund of funds. So the intake valve is wide open from every direction at once. (I dug into how private equity actually plays water in my newsletter on the three PE strategies reshaping water tech, if you want the mechanics – and you can subscribe here while you are at it.) If you want the founder’s-eye view of where all this capital starts, I walked through it in how water-tech venture capital actually fuels growth.

Why are there 600 private water bets but no way out?

Here is the catch I keep coming back to inside my Leviathan database, where I have logged 5,531 completed water deals since the year 2015. The bench of PE-owned water platforms went from 42 companies in 2015 to nearly 600 in 2025 (arguably, by my own definition – I will expand on that another day). But a platform is not an exit. When private equity sells to private equity, the yo-yo just gets flicked again by a bigger hand. The string is still attached. And each of those platforms now swallows about four times as many bolt-on acquisitions as it did a decade ago, which means the loop does not run on building new platforms anymore – it runs on feeding the ones it already has.

So who does cut the cord? Mostly the strategics, and they are picky in a very specific way. Two of the people who broker these deals for a living sat down with me to walk through it. As Samrat Karnik, who runs water M&A at Houlihan Lokey, put it, a target has to be ready before a strategic will touch it.

That is why the dollars flow to established, profitable, growing platforms and not to technology bets. Veralto bought Aquatic Informatics for its scaled software platform; Badger Meter bought s::can and then SmartCover, both proven businesses with a real commercial engine. As David Rose of Thales Water Advisors framed it, acquiring a company can simply be a faster, de-risked proxy for R&D – but only once it is proven. The growth itself comes in a strict order: a product gap first, then a market gap, then a geography.

Will Gradiant IPO?

Then, sitting across the table from me, Anurag Bajpayee said the quiet part out loud. Gradiant – now a two-time unicorn after its Series E landed at a $2 billion valuation – stopped raising money to survive about four years ago. It is a cash generator now, and the biggest use of proceeds from this round is acquisitions, not runway. So why raise at all, and why talk about going public? Because, he told me, you cannot control your own destiny otherwise.

Notice what he is not saying. There is no date, and the IPO market right now is not exactly throwing a party. What he is saying is that liquidity is already happening privately: Gradiant has a reasonably viable secondary market for its shares, and some of the people who came in at Series A and B have already cashed out at very attractive multiples. That matters, because it is the closest thing water tech has to a working exit – and it is the backstory to how this company became the first and only water-tech unicorn in the first place.

Hasn’t water tech tried to go public before?

This is where the “zero public exits” in my title comes from, and it is the part that should worry anyone betting on the loop. Of those 5,531 deals in my database, the genuine public-market exits are a rounding error – barely a handful even mention a listing, and several of those are companies going the other way, taken private (H2O Innovation, for one). IPOs in the 2020s are a very pale echo of the 2010s. So the cord almost always gets cut somewhere other than a stock exchange.

Look at what Madrid was actually talking about and you see the shapes that work. Evoqua was built by private equity, taken public, then sold to Xylem for $7.5 billion. Ovivo’s electronics arm went to Ecolab for $1.8 billion. Seven Seas Water passed from one infrastructure fund to the next. And Axius Water, a platform private equity bolted together in barely five years, was sold to CRH – a building-materials group, a true wildcard from outside water – just two weeks before the summit opened. The path to a public exit does exist, mind you: NanoH2O sold to LG Chem and then on to Glenwood for $1.2 billion, and De Nora actually rang the bell, a story I told in how De Nora went from zero to IPO in seven years. It is just that, so far, it is the exception that proves how rare the rule is.

What is the “missing middle” trying to route around the drought?

While the exit door stays jammed, capital is busy trying to build its own. Aurelia Carrère, Thematic Chair at Summa Equity, calls her play the “missing middle”: a platform that buys companies in the gap between early-stage venture and the big buy-outs, scales them with utilities, and goes deliberately deep on one theme – emerging pollutants, and PFAS-destruction in particular. Her targets are concrete.

Summa starts from a platform doing roughly €5 to €10 million of EBITDA and builds up, the same way it already runs a waste-management platform across the Nordics. What I like about Aurelia’s framing is that she ties her private-equity missing middle to a missing middle in water itself – the same empty middle of the company landscape that Guillaume Clairet of H2O Innovation has been describing for years (we compared notes on it off the record in a Madrid corridor – hi Guillaume!), and the gap I went hunting for across 2,587 water companies in my own newsletter. The hole in the cap table and the hole in the company map turn out to be the same hole, seen from two sides. If you want that thesis in full, it runs right through the H2O Innovation acquisition playbook and my 2,587-company investigation.

Xylem is solving the same problem from the opposite end. Rather than pick early winners itself, it acts as a limited partner – a fund of funds – inside specialists like Burnt Island Ventures, using them as what Sivan Zamir, now Xylem’s Chief Innovation and Product Officer, calls the “top of the funnel.” Two very different firms, both engineering a way to manufacture the exit the public market is not providing. That is what an immature ecosystem looks like when it refuses to sit still.

How mature is the water investment ecosystem, really?

So I asked everyone the same blunt question: on a scale to ten, where is this ecosystem? The answers were a Rorschach test. Job van Schelven of Pureterra Ventures, ten years in, said three, maybe four. Aurelia called the system’s maturity “globally high.” Sivan was “really bullish.” And Anurag, who arguably built the biggest thing in the room, was the harshest of all: a three, maybe a four, against a Silicon Valley he puts at eight or nine. His arithmetic is the one I keep.

A single Gradiant IPO, he reckons, would move water from a three to a six. To get to an eight or a nine, you would need a few of those – not one fairy tale, but a track record. That is the whole thesis in one number. The capital is here, the platforms are here, the talent is here. What is missing is proof, repeated enough times that nobody can call the first one a fluke.

So, is the inflection point in the room?

After three days in Madrid I tried to argue myself out of it, and I could not. We are living through the most active capital chain the water sector has ever had. The growers have dry powder, the rotation operators are running at a record pace, the strategics are paying premium prices for de-risked platforms, a genuine wildcard like CRH just walked in for the first time, and the sector’s only unicorn doubled its valuation while talking IPO out loud. For the first time, I would not laugh that idea off the stage. I am not saying it is a good idea either – the jury is still out – but that is not a sector waiting for an inflection point. That is a sector living inside one.

But being at an inflection point is not enough. A chasm is something you cross – would make a good title for a book – because if you do not cross it, you die in the middle. All the scaffolding is in place, and it is also still very fragile. The next twelve months will not be decided by how much money flows in; that part is solved. They will be decided by whether one company, probably this one, can finally turn the yo-yo into a water wheel and cut the cord in public. Watch that door. The full conversation is worth your time – and if you want to hear all six investors make their case, the episode is right here.

Watch the full conversation

Frequently asked questions

Will Gradiant IPO?

Gradiant is, in CEO Anurag Bajpayee’s words, “pretty close to being IPO-ready,” completing its reporting and compliance work and watching the market. No date has been set. He frames going public as the way to control the company’s destiny and give shareholders meaningful liquidity, while noting that a viable private secondary market already lets early backers cash out.

Is Gradiant the first water-tech unicorn?

Yes. Gradiant is the water sector’s first and only unicorn, and after its 2026 Series E it became a two-time unicorn at a $2 billion valuation – the raise itself was undisclosed.

Why are there so few water-tech IPOs?

Of the 5,531 completed water deals in my Leviathan database since 2015, genuine public-market exits are a rounding error, and IPOs in the 2020s are a pale echo of the 2010s. The track record is thin, so water companies almost always exit through a strategic sale or a private-equity-to-private-equity handoff rather than the public market.

How big is private equity in water now?

Private equity ran about 37% of all water deals in 2025, up from roughly 14% in 2015, with 165 acquisitions in the year – a record. Most were small: 80 of the 165 targeted companies worth under $10 million. The bench of PE-owned water platforms has grown from 42 in 2015 to nearly 600.

What is the “missing middle” in water private equity?

It is the gap between early-stage venture funding and large buy-outs – companies at roughly €50 to €150 million of revenue that need a platform to scale. Summa Equity is building specifically in that band, starting from platforms doing €5 to €10 million of EBITDA and focusing on emerging pollutants like PFAS.

Related: why a water VC like Cycle H2O maps the exit before writing a cheque

The post Will Gradiant IPO? 600 Water Bets, Zero Public Exits appeared first on (don't) Waste Water.

By my count, the fifth most active water tech investor on the planet is not a water fund. It is the venture arm of a 100-year-old, family-owned asphalt-and-quarries company from Indianapolis, and water is barely a fifth of what it does. HG Ventures has backed 12 water rounds across 7 companies in my Leviathan database, which puts it behind only Burnt Island Ventures, Echo River Capital, PureTerra Ventures and Emerald Technology Ventures, every one of them a dedicated water specialist. HG is the only corporate venture arm in that top five. And here is the part I can say that nobody else can: I have sat down with the founders of five of the seven companies HG backs. So let me show you the fund through the people I have actually interviewed.

Who are the most active water tech investors in 2026?

When I rank every investor in my Leviathan database by the number of water rounds they have joined, the order at the top is Burnt Island Ventures with 48, Echo River Capital with 23, PureTerra Ventures with 16, Emerald Technology Ventures with 15, and then HG Ventures with 12.

Deal count here just means the number of distinct rounds an investor has joined, which is the cleanest way I know to measure how active someone really is rather than how loud they are. I have had every one of those four specialists on the podcast, and to a fund they exist to do water and nothing else. Then there is HG, a corporate fund most people in water have never heard of, keeping their company while calling itself something else entirely. That is the puzzle, and it is worth taking apart.

What is corporate venture capital, and why does HG’s version work?

Corporate venture capital, or CVC, is venture investing run from inside an operating company instead of from a standalone fund. A normal fund raises money from outside backers, the limited partners, and has to hand it back with a profit on a clock that usually runs about ten years. A CVC invests the parent company’s own balance sheet, and the textbook knock on it is the four-year curse: most corporate venture arms get quietly shut down around year four, the moment the parent loses patience.

HG sidesteps that curse by structure, and Ginger Rothrock, who runs the fund as Managing Director, put it more plainly than I could.

So while a classic fund is counting down to the day it has to sell, whether or not selling is good for the company, HG can simply wait. No limited partners, no clock, no forced exit. (I made an unpopular but honest case about this kind of money once, if you want the argument in full.) When you are a century-old family business, patience is not a strategy you adopt, it is just who you are.

Why a fund this small still chases returns

There is a second objection, and Ginger raised it before I could. Plenty of corporate venture arms exist purely as strategic antennae, where the money barely matters against the parent’s core business. She is candid that HG is a different animal, and the reason is size. She pointed to a friend at Samsung’s venture arm who did a three million dollar deal, got 20x, and handed back sixty million, and Samsung, a company that ships phones and televisions by the container-load, barely noticed.

A strategic CVC like that is mostly motivated to help the parent sell more product. HG is small enough, in pure dollar terms, that the money it returns to The Heritage Group matters just as much as any strategic value, which is precisely why it behaves like a real investor rather than a corporate science project. That, more than anything, is why it out-deal-flows the funds around it.

Tourist or specialist? How 18% beats the funds that do nothing else

There is a fair objection here. If water is only 18% of HG’s thesis, how does it out-invest funds that do nothing else? When I analysed 1,425 water investors last year, I found that 86% of them put less than a tenth of their portfolio into water, and the median allocation was a thin 6.7%. In water tech, I wrote at the time, you are either a tourist or a specialist, and almost never a resident. (If you want the detailed maths on the three investor tribes hiding in that data, I dug into it on my newsletter – consider subscribing.)

By those numbers HG is a tourist, water a slice rather than the whole pie. The trick is that it behaves like a resident, and that has almost nothing to do with how much money it points at water and almost everything to do with the kind of money it is, and where it chooses to spend it.

From an incinerator to a water thesis

HG’s first water cheque was never meant to be a water strategy. It was a waste problem. The Heritage Group used to own and operate an incinerator through its environmental arm, and around 2019 Ginger’s team watched the PFAS-laden waste streams come in and simply not slow down. PFAS, the “forever chemicals” now turning up in drinking water across the world, were arriving by the truckload and were not going anywhere.

So they went looking for anyone working on the contaminant itself, and found exactly one company.

From that single waste-driven bet the thesis grew outward into industrial wastewater, water reuse, and zero liquid discharge, the extreme case where a plant recovers essentially all of its water and discharges almost nothing. (here is the economics pushing industrial water reuse) Three of HG’s seven water companies sit somewhere on the PFAS spectrum, which tells you the origin never really left.

HG’s water portfolio is, basically, my guest list

This is where I can do something no other write-up of HG can. Across those 12 rounds sit 7 companies and a little over 190 million dollars of total financing, and HG itself has deployed exactly 48,523,663 dollars into water, a figure I got confirmed straight from the firm, to the dollar, which is the kind of number no public database will hand you.

Five of those founders have sat across from me. Alex Rappaport built ZwitterCo around a membrane meant, in his words, to “solve the Achilles heel of filtration: fouling, clogging,” which is exactly the bottleneck that makes industrial water reuse so hard. Julie Bliss Mullen started Aclarity to destroy PFAS rather than just trap it, the way she had degraded other contaminants in her PhD: “they all could be degraded, and I did it electrochemically.” And Emily Hicks at FREDsense moved her field water test onto “a polymer based on a plant material that binds PFAS,” selective enough that, when it grabs the molecule, it releases a fluorescent dye she can simply measure.

The other two interviews show how wide HG’s idea of water actually runs. Megan Glover scaled 120Water, the one HG has since partly exited, on a sharp insight that the lead-in-water crisis is really a software problem: “the contaminant is lead, but at the root cause it’s a data management issue.” And back in 2020, Ari Raivetz told me that Transcend’s software “automates the first 20 to 30% of the engineering of a water or wastewater treatment facility,” cutting the grunt work out of plant design. Puraffinity’s PFAS media and ElectraMet’s metal recovery round out the seven. Patient money, pointed squarely at the unglamorous, regulated, industrial end of water.

What does HG offer a founder besides a cheque?

Notice what those five companies have in common beyond a logo on HG’s website: each one needs to prove a technology works on real, ugly, industrial water before a customer will trust it. That is exactly where a corporate parent stops being a handicap and becomes the product.

HG’s one-line thesis is to invest where The Heritage Group can help, then actually help. A pure financial VC can wire money and make introductions, but it does not own the quarries, the asphalt plants and the environmental operations where a young water technology can be tested on genuinely difficult streams. That access is the edge HG sells, and it is a large part of why it wins deals against funds with deeper pockets.

How do you pitch a water tech VC like this one?

Now the part founders most need to hear, because it runs against instinct. The person deciding whether to back you is a PhD chemist with The Heritage Group’s R&D labs down the hall, so you would expect her to lead with the technology. She puts it last.

The single thing she sees founders get wrong is not knowing who their real competition is. And the kindest thing an investor like this can give you is speed, a point Simon Olivier of Cycle H2O made to me from the other side of the table: he would rather founders “come to us early or earlier,” and if they are not ready, send them off to coaching than leave them hanging. For a founder chasing a cheque, a fast no can be almost as useful as a slow yes, and on that front HG is unusually quick.

The same-day yes or no

That speed is not a figure of speech. HG runs all of its diligence in-house, with no outside consultants, and the front of the process is brutally quick. A first call lasts half an hour. Then the founder goes in front of the entire investment group for an hour, back and forth, and HG decides that same day whether it is going into diligence at all.

If the answer is yes, one partner becomes the diligence lead and chases down two or three go/no-go questions straight away: is the revenue real, does anyone actually care about this, and is it a fit for The Heritage Group. Only then does it open into the fuller process, which almost always includes a technical session with experts pulled from inside the group. For a founder, that combination, a fast verdict and a hundred years of industrial muscle behind a yes, is rare enough to be worth pitching for.

Is water actually a good long-term investment?

This is where the patient money starts to look less eccentric and more correct. The public market has been an unkind place for small water technology companies, and the real returns have been accruing quietly in private rounds instead. In my database, the early-stage cheques where investors like HG actually live, the pre-seed to Series A rounds, more than tripled, from 33 in 2018 to 109 in 2025.

That is a 3.3 times jump, and it comfortably outruns the broader market of all water rounds, which only doubled over the same stretch. So the demand for capital is real and growing fastest exactly at the stage HG plays. The open question is the exit: water has produced very few of them, and a fund on a ten-year clock has to sell whether or not a buyer has shown up. (the rare escape is how Gradiant became the first and only water tech unicorn)

This is where HG’s lack of a clock turns into a quiet superpower, and where it has already done something most water investors are still waiting to do: it booked an exit. When 120Water raised its 43-million-dollar Series B in early 2024, HG sold down its stake “with a good multiple,” as Ginger put it, rather than riding along. The reasoning was telling. 120Water is a municipal software company, and as she said, “we don’t do municipal, we don’t know a lot about the areas in which they operate, so part of it was just fit,” while her first fund needed to start returning money: “we need to get some exits. There was an opportunity to get some liquidity, so it worked. We still have some ownership.” That is the asymmetry in one move. HG never has to sell, so when it does, it is because the fit is wrong and the price is right, not because a clock ran out. It is the whole reason the most active investor on my list is the one under no pressure at all.

The one-word thesis

When I asked Ginger for her one-word thesis on water, the answer came back as “inevitable.” After nine years of out-deal-flowing funds that do nothing but water, that lands a good deal heavier than the bumper sticker it sounds like. The harder question is what happens when all these private bets finally need a way out, in a sector that has barely produced one, and that is the conversation Ginger and I have in full on the episode.

Frequently asked questions

Who are the biggest water tech investors in 2026?

By number of water rounds in my Leviathan database, the most active are Burnt Island Ventures, Echo River Capital, PureTerra Ventures, Emerald Technology Ventures, and HG Ventures. The first four are dedicated water funds. HG Ventures, the corporate venture arm of The Heritage Group, is the only corporate investor in the top five.

What is corporate venture capital (CVC)?

Corporate venture capital is venture investing run from inside an operating company rather than an independent fund. Because the parent is not on a limited-partner clock, a CVC like HG Ventures can hold a company for a decade or more without being forced to sell, which is why it can behave more patiently than a traditional fund.

How do you pitch a water tech VC?

Lead with the story, not the technology. HG Ventures screens first on whether a founder can explain the market, name their real competition, and tell a clear, articulate story. Founders who open with the technology tend to lose, and at HG the decision to enter due diligence can come the same day you present.

Is water a good long-term investment?

Water demand is structural, but the returns mostly sit in private markets rather than public ones, where small-cap water stocks have a long record of drifting down after their IPO. Early-stage private water rounds more than tripled between 2018 and 2025, which is where specialists and corporate venture arms like HG Ventures concentrate.

What are industrial water reuse and zero liquid discharge (ZLD)?

Industrial water reuse means treating a plant’s own wastewater on-site and recycling it back into the process. Zero liquid discharge is the extreme version, where essentially all of the water is recovered and almost nothing is discharged. Rising freshwater costs, tightening discharge rules, and corporate ESG targets are pushing both up the agenda.

Related: Simon Olivier walked me through Cycle H2O’s de-risking playbook for early-stage water

The post How HG Ventures Quietly Became a Top-5 Water Tech Investor appeared first on (don't) Waste Water.

Every water utility on earth still validates its drinking water roughly the way it did in 1887: take a sample, smear it across a petri dish, and wait about 72 hours for the bacteria to grow numerous enough to count by eye. Which means the “real-time” dashboard your local utility is so proud of is, in plain terms, reporting on what died in the water last Tuesday. That three-day blind spot is one of the most expensive habits in the whole water industry, and killing it is the entire premise of real-time microbial monitoring. On episode 21 of season 13, I sat down with Lorenzo Falzarano, the founder of Orb, who builds inline sensors that count microbes in seconds instead of days. His framing is blunt: if artificial intelligence is the water sector’s shiny new brain, somebody still has to build the optic nerve. So here is why the eyes have been missing for 140 years, what running blind actually costs, and why the money is finally starting to pay attention.

Why are water testing methods so dangerously outdated?

Start with the uncomfortable fact. The reference method for deciding whether your tap water is safe, the culture plate, was invented in 1887, the same decade the motorcar started elbowing the horse off the road. You take a sample, you put it in an incubator, and you wait roughly 72 hours for colonies to grow visible enough to count by sight. By the time the answer lands on someone’s desk, that water is long gone, drunk or discharged or pushed into a river. We have spent the last few years building digital twins and bolting artificial intelligence onto everything that holds water, and the whole sophisticated apparatus is still being fed a number that describes the past. As Lorenzo puts it, we are running the global water system on a 3-day delay.

Culture method (the petri-dish test): you take a water sample, place it on a nutrient plate, and let any microbes multiply for one to three days until the colonies are big enough to see and count. Accurate, cheap, and almost 140 years old. Its flaw is time: the result describes the water as it was, not as it is.

The hidden cost of running a water plant blind

Now, running blind is not free. It is just an invisible line item, one I would call the safety tax. Because operators cannot see the biological load in real time, they default to the worst case: overdose the disinfectant, run the ultraviolet lamps at full tilt, hold extra contact time, all just in case. When I dug into the numbers behind this episode, I found a single 100,000 cubic-metre-per-day plant burning roughly $21,000 every single day in excess chemicals alone, which works out to about 6% of its total operating cost, spent purely to maintain a safety buffer against a risk nobody could measure. Run the UV lamps flat-out when the water is already clean and you waste something like 15% of that energy. And because overdosing creates extra sludge, and sludge handling can be 40% of a plant’s operating cost, you end up paying to manufacture waste you then pay again to haul away.

I once described this whole dynamic, in a newsletter, as the reason you walk slower across a dark hotel room: take away the sense you normally use to avoid risk, and you overcorrect on everything else. I wrote about why, in this gold rush, the smart move is to sell shovels.

What happens when nobody finds the source?

And the safety tax gets a lot more expensive when things actually go wrong. Lorenzo drops one statistic that sums up the entire crisis: by Orb’s reckoning, around 70% of water contamination investigations end as cold cases, where the utility never finds the root cause. Why? Because without high-resolution data, you are working a crime scene three days after the evidence washed downstream. Regulators have started pricing in that blindness directly. In 2025 the UK regulator Ofwat hit Thames Water with a £104.5 million penalty over failures across its sewage operations. And when cryptosporidium broke out in Brixham in 2024, the contamination cost the Pennon group £16.3 million and put roughly 16,000 homes under a boil-water notice for weeks. That was not the cost of fixing the damaged valve that let the parasite in. It was the price of not knowing the valve was broken until thousands of households were already drinking the consequences.

What is real-time microbial monitoring, really?

So here is the precise gap Orb is built to fill. At a treatment works today, operators mostly watch two things: turbidity and chlorine. Neither one tells you what is actually alive in the water, and many times there is no correlation between a turbidity reading and the real microbial load. Yet by Lorenzo’s account, the top five of the ten most common water-quality standard failures are all bacteriological, meaning they are about living organisms, the coliform bacteria and E. coli that flag something unsafe has slipped through, rather than the chemistry. Sit with that for a second: the single biggest reason plants fail their standards is the one thing almost nobody monitors live.

Turbidity: how cloudy the water is, measured by how much light it scatters. It is a useful, cheap proxy for “something changed,” but it is a health-blind one, a clear glass of water can still be teeming with bacteria.

How does Orb count microbes in seconds, not days?

So how do you compress three days into three seconds? Instead of growing bugs on a plate, Orb shines light at the water and reads the way microbial cells fluoresce, glowing back a little brighter than the plain water around them, and counts them as they flow past. No reagents, nothing consumed, nothing destroyed, just photons doing the work. The reading comes back in about three seconds instead of three days. Orb’s website pushes a sharper number, claiming the method is roughly 1,700 times faster than the incumbent way of counting microbial pollution, and you can take the exact multiplier as the marketing line it is, because the part that actually matters is the change of category, from days to seconds. And the sensor is only half of it: the signal feeds an intelligence layer that does not just tell an operator their bacteria count jumped, it points at the most likely reason it jumped. Making all that data legible to the people actually running a plant is its own hard problem.

Fluorescence sensing: certain molecules absorb light at one wavelength and re-emit it at another. Living microbial cells, rich in proteins and amino acids, fluoresce in a tell-tale way, so an optical sensor can count them in flowing water without any chemical reagents, in real time, instead of waiting for a culture to grow.

Lorenzo is candid that this means building hardware, which is exactly the thing most investors would rather avoid. But you cannot have a smart-water revolution without it. I have argued before that measuring water quality is, awkwardly, a hardware problem dressed up as software.

Orb is not chasing the petri dish alone

And no, reassuringly, this is not one company shouting into the void. The whole frontier is racing the same near-140-year-old plate, which is the best possible sign that the problem is real. On my own podcast I heard the identical complaint from a completely different angle when Sam Dukan walked me through Diamidex, whose MICA system delivers an E. coli result in 6 hours instead of 24, and a Legionella result in 2 days instead of the usual 10, while matching the standard method exactly. Different physics, same enemy: the clock.

There is a small ecosystem forming here, and I have hosted more of it than I expected. FREDsense, for instance, is chasing the same goal with an electrochemical biosensor.

Is real-time water monitoring actually a market yet?

This is where it gets genuinely interesting for anyone who deploys capital, and where my day job collides with my podcast. When I ran the numbers across my own Leviathan database, the entire peer set of real-time water-quality biosensing companies, the ones genuinely doing what Orb and Diamidex do, has raised only about $97 million across 54 rounds, ever. No single round in that group tops roughly $12 million. To put that in perspective, that is the whole category raising, across its entire history, less than a single mid-size Series B in almost any other deep-tech vertical. This is not a crowded gold rush. It is a frontier that has barely been funded at all, which is either a warning or an invitation depending on your temperament.

The shape of that line matters more than the total. For years the category raised single-digit millions and looked like a science project. Then 2024 and 2025 happened, and last year alone the peer set pulled in $34.4 million across 11 rounds, its busiest and best-funded year ever. The money is, finally, starting to notice the eyes are missing. I track where water-tech capital actually goes in my state-of-funding work. If you want the running version of this, I send it out in my newsletter.

Water reuse is ending water’s three-day grace period

So why now, after 140 years of the industry shrugging at the three-day lag? Because the future of water is reuse, and reuse quietly demolishes the old excuse. You cannot recycle water through faster and faster treatment cycles while waiting three days to confirm a batch is safe. By the time your culture result comes back, you are storing three-day-old water in a tank, which, as Lorenzo points out, is arguably worse than the water you started with. The moment treatment cycles get short enough, real-time validation stops being a nice-to-have and becomes the gate that the whole process has to pass through.

Frequently asked questions

How is drinking water tested for bacteria?

The standard method is the culture, or petri-dish, test: a water sample is placed on a nutrient plate and any microbes are left to multiply for one to three days until the colonies are large enough to count by eye. It is accurate and cheap, but slow, the result describes the water as it was up to 72 hours earlier.

How long does water quality testing take?

For the classic culture method, one to three days. Faster lab techniques have cut that sharply, Diamidex returns an E. coli result in about 6 hours, and real-time inline sensors like Orb’s read microbial signals in seconds. The trade-off has historically been between speed, cost, and how closely a method matches the regulatory gold standard.

What is real-time microbial water monitoring?

It is the continuous measurement of the living, microbial load in water using inline sensors, rather than sending samples to a lab. Reagent-free optical sensors count microbes as the water flows past and feed the readings to software that flags trends and, increasingly, the likely root cause of a contamination event.

Why is real-time water quality monitoring important?

Because the three-day lag is expensive in two directions. It forces operators to overdose chemicals and energy as a precaution (the “safety tax”), and when contamination does happen, roughly 70% of investigations never find the source. As water reuse spreads, instant validation of each batch becomes unavoidable.

What is coliform bacteria in water?

Coliforms are a broad family of bacteria used as an indicator of water quality: most are harmless, but their presence signals that conditions could allow harmful organisms through, and some, like E. coli, point to faecal contamination. Coliform failures are among the most common reasons a treatment works breaches its standards.

Is real-time water monitoring a good investment?

It is early and thinly funded. By my count across the Leviathan database, the real-time water-quality biosensing peer set has raised only about $97 million across 54 rounds in total, with no single round above roughly $12 million, but 2025 was its biggest year yet. Small market, fragmented field, accelerating demand: make of that what you will.

The eyes are finally being built

For 140 years the water industry got away with testing for life by waiting for it to grow. Reuse, regulation, and the simple cost of running blind are quietly ending that grace period, and the companies building water’s missing eyes are still cheap, few, and early. Whether Orb is the one that wins is an open question. That the eyes are finally being built is not. Go listen to my full conversation with Lorenzo Falzarano, it is worth your hour.

Sources

1. Ofwat, “Enforcement case in Thames Water’s management of its sewage treatment works and sewerage networks” (penalty announced 28 May 2025). ofwat.gov.uk
2. ITV News West Country / Pennon Group, “South West Water lost more than £16mn to Brixham parasite outbreak” (27 Nov 2024). itv.com
3. (don’t) Waste Water podcast, S13E21 (Orb, Lorenzo Falzarano) and S12E20 (Diamidex, Sam Dukan) : first-party interviews. Retrieved 2026-06-11.
4. Leviathan water-tech funding database (Antoine Walter) : real-time microbial-monitoring peer-set funding, verified 2026-06-11.

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This looks like a solar panel, but it’s really a water tap, one that needs no pipe, no grid, no connection to anything, and still pours out enough clean, mineralized water for two people, all year long. Unless it’s freezing, or too cloudy, or raining too hard, or the unit just breaks. SOURCE Global built that machine, called it a Hydropanel, and convinced Bill Gates, Jeff Bezos, BlackRock and Microsoft to pour roughly $270 million into it. That makes SOURCE one of the three most-funded water-tech companies there has ever been, by my count in my Leviathan database. And then, in about twelve months, it went quiet and died. So what actually kills a company that raised that much, from investors that smart? Three things, mostly: it ran out of cash and couldn’t raise more, its panels started breaking faster than it could fix them, and the pivot meant to save it came too late. Let me walk you through how.

What did SOURCE Global actually build?

So let’s start with the machine, because it really is a beautiful idea. A Hydropanel is a solar-powered box that pulls water vapour out of the air, condenses it into liquid, and mineralizes it into drinking water, with no connection to a grid or a pipe. That’s atmospheric water generation, AWG for short: making water from thin air. The company behind it was founded in 2014 in Arizona as Zero Mass Water, and renamed SOURCE Global in 2020. Its founder, Cody Friesen, is an MIT-trained materials scientist who collected just about every innovation prize going, from MIT’s Innovators Under 35 to the Lemelson-MIT Prize. And when I rank every water-tech company by the funding I’ve logged in my Leviathan database, SOURCE comes in third, behind only Gradiant and Lilac Solutions. It’s the only company in that top tier that’s now dead.

Raising $270 million was the easy part

Here’s the thing about fundraising milestones: they get cheered as proof a company is winning, but they’re really just proof it needed cash. No founder gives up equity for fun. The way I think about it, venture money is nitro for your engine: you use it to grow faster than you naturally can, while hoping the car doesn’t explode before you’ve finished building it. SOURCE strapped on four bottles of nitro. It raised about $22 million in a Series A in early 2018 (a startup’s first big institutional round), another $20 million in a Series B the same year, $50 million in a Series C in 2020 led by BlackRock, and then the big one, a $130 million Series D in 2022 led by Bill Gates’ Breakthrough Energy Ventures. Each later round is a bet on the last one’s promise paying off. So the real story of SOURCE isn’t the money. It’s the promises that money was bought with, and whether they came true.

Did the technology actually work?

For a while, genuinely, yes. The first promise, back in 2018, was to “leapfrog infrastructure just as cell phones do”: if piping water to people is too expensive, decentralize it instead, and bring it straight to whoever needs it. And SOURCE delivered the proof. It donated Hydropanels to Puerto Rico after Hurricane Maria, dropped them in the middle of nowhere in Australia and Syria, put them on pediatric wards in Jamaica. It closed that first funding cycle with a bold rollout in Neom, Saudi Arabia, and later deployed across the Navajo Nation, the Philippines and Colombia, reaching references in 54 countries. Nobody expected those panels to be cheap or eternal yet; they expected a proof of concept, and then a proof of market, and they got both. Then, on my own podcast microphone in 2022, SOURCE made the promise that would come to haunt it.

The Hydropanels couldn’t survive the field

To chase “the cheapest water on Earth,” SOURCE had to cut costs, hard. So it built a 400-person plant in Penang, Malaysia, and moved to as many cheap parts and materials as it could. The trouble is that making cheap parts that still work is its own skill, and from the former employees I heard from on both sides of the Pacific, that didn’t go smoothly: constant plan changes, indecision from the top, and at the Malaysian facility, a churn of layoffs and rehires that wrecked consistency. Quality slid. The most documented case is Allensworth, California, where panels bought to fix arsenic-tainted groundwater ended up sitting broken in people’s yards. But here’s what makes it sting: just a couple of years earlier, on that same microphone, SOURCE had promised those panels would last two decades.

How long do SOURCE Hydropanels actually last?

Not twenty years. That was the marketing. Quietly, a couple of years later, SOURCE walked the commitment back to five years of support. And in the field, plenty didn’t even make that: in 2024, the local outlet SJV Water reported that in Allensworth, two years in, many residents had pulled the Hydropanels out of their yards because they’d stopped working and were just taking up space, with the maintenance crew, in the company’s own words, thinned by “high turnover.” It’s worth remembering that as far back as 2018, the YouTuber Thunderfoot had done the brutal arithmetic in a video literally titled “Zero Mass Water busted”: at around $4,500 for two rooftop panels, you could have a tanker truck haul you the same water from the other side of the country over the panels’ lifetime, and still pay five times less.

What were the warning signs the money was running out?

The first tell wasn’t a press release. It was silence. SOURCE’s backers have famously deep pockets, Breakthrough Energy Ventures, Microsoft’s Climate Innovation Fund, BlackRock, so when they declined to throw in a bridge (a small, short-term top-up, usually at the last round’s price, from investors you already have), that alone said something. Then the rumour started going around the small world of water investors that SOURCE was raising a down round: new money at a lower valuation than before, which dilutes and devalues the existing investors twice over, and which usually either closes within weeks or never closes at all. For months, it was crickets. Then, in April 2025, an SEC filing surfaced showing SOURCE trying to raise $75 million and having sold just $19.3 million of it. The name at the top of that filing wasn’t Cody Friesen. He’d vanished from the document entirely. I reached out to him at the time, and didn’t hear back.

Why did a water-from-air company start canning water?

This is the part that sounds insane until it doesn’t. In 2023, SOURCE bought Proud Source Water, a bottled-spring-water brand, and launched Sky Water: canned water made from its Hydropanels. A company that had spent years arguing bottled water was the problem was now… selling cans of water. But it’s a page straight out of the Xerox playbook. When the Xerox 914 copier proved too expensive to sell in the 1960s, Xerox stopped selling the machine and started leasing it, charging per copy; customers bought the output, not the hardware. Selling canned Hydropanel water could, in theory, do the same: create steady volume for the factories while the panels stayed in SOURCE’s own hands. The problem is that beverages are brutal: by industry counts, 90% of beverage startups fail within two years, and the move needed marketing cash SOURCE no longer had.

So is SOURCE finally, fully dead?

By my read, effectively yes. SOURCE posted to LinkedIn near-daily, then stopped dead on the 27th of February 2025; my own liveness scoring in the Leviathan database flags that as a silence ratio of nearly 200 against a critical threshold of ten, and scores the company dead at 0.90 confidence. The executives updated their profiles to “open to work” through the spring, the products went out of stock, and source.co quietly carried on as a Shopify storefront on autopilot. The one apparent survivor was Proud Source Water, still selling, seemingly near breakeven, the closest the SOURCE empire ever got to profitability. Then, after I published this story, readers from Mackay, Idaho, where Proud Source bottles its water, wrote to tell me that plant had closed too. I haven’t been able to confirm it independently, and public listings still show the brand active, so treat it as a developing thread, not a settled fact. But if it’s true, even the lifeboat sank.

SOURCE’s death doesn’t doom atmospheric water generation

It’s tempting to read it the other way, that the best-funded one died so the rest are doomed, but the data says otherwise, and I dug into exactly this in my newsletter follow-up to the episode. By my count, since SOURCE raised its Series A in 2018, seventeen other AWG companies have raised growth-stage money, roughly $120 million between them, and nine of those raised in 2025 alone, backed by genuinely water-savvy investors like Burnt Island Ventures and Echo River Capital. The difference is that they mostly avoid SOURCE’s original sin. You can make water from air, you can do it fully off-grid, and you can sell it cheaply to consumers, but you only get to pick two of those three. SOURCE tried for all three at once. The others picked their two.

Was SOURCE a scam?

Also no, and the distinction matters. A scam is Theranos: Elizabeth Holmes went to prison because she *knowingly* deceived. SOURCE’s loudest critics were never hidden, Christopher Gasson at Global Water Intelligence called it an “egregious waste of money” in print, and the analyst Rhys Owen said flatly that it was overvalued, both of them one Google search or one phone call away from any investor doing diligence. What actually fooled people was subtler, and almost poetic: the Hydropanel looked like a solar panel, so investors assumed solar’s plummeting cost curve would apply to it too. It won’t. There are hard thermodynamic floors on pulling water from air that no amount of scale erases. SOURCE, in the end, confused thermodynamics with a religion.

What should a water investor take away from this?

Not a witch hunt. The temptation after a failure this loud is to start hunting for the next dodgy water-tech, and I’d push back on that. Water entrepreneurship is, frankly, an unreasonable endeavour, and if you leave it only to cautious water engineers (like me), you get nothing but incremental improvement, which at the scale of today’s water problems may simply not be enough. The lesson of SOURCE isn’t “stop dreaming.” It’s “dream rooted in the physics, not in spite of it.” Cody Friesen says a builder’s gotta build, and he’s already onto something new, so I’ll be watching for it. For the full story, the failures and the people who reached out after, listen to the episode below, and if you want more of my water-tech post-mortems, subscribe to my newsletter.

Frequently asked questions

What does SOURCE Global do?

SOURCE Global makes solar-powered Hydropanels that pull water vapour from the air and mineralize it into drinking water, with no grid or plumbing connection. Founded in 2014 in Arizona as Zero Mass Water and renamed in 2020, it raised roughly $270 million but is now effectively defunct.

Who is the CEO of SOURCE Global?

Founder Cody Friesen, a materials scientist trained at MIT, led SOURCE until early 2025. Bill Witz took over as CEO in March 2025, and Friesen publicly announced he had left the company in June 2025.

Is SOURCE Global publicly traded?

No. SOURCE Global is a private company (a Public Benefit Corporation). Its last major raise was a 2022 Series D; an April 2025 SEC filing sought $75 million but had sold only $19.3 million.

How long do SOURCE Hydropanels last?

SOURCE originally marketed a lifespan of up to 20 years, then quietly reduced its commitment to 5 years of support. In the field, many units failed within two to three years, with reports of broken fans, dead batteries, and absent maintenance.

Is SOURCE Global still in business?

Barely. Its LinkedIn has been silent since February 2025, its products are out of stock, and its leadership has departed; my liveness scoring rates the company dead at 0.90 confidence. Its acquired brand Proud Source Water remained active, though one unconfirmed reader report says its Mackay, Idaho plant has since closed.

Sources

1. SEC EDGAR, Form D, SOURCE GLOBAL, PBC (CIK 0001644099), filed 3 April 2025. sec.gov
2. SJV Water, “Allensworth residents feel abandoned by company that makes water out of thin air,” 2024. sjvwater.org
3. Business Wire, “SOURCE Global, PBC… Raises More Than $130 Million,” 19 July 2022. businesswire.com
4. CNBC, “Bill Gates and Blackrock backing Source Global, maker of hydropanels,” 28 March 2022. cnbc.com
5. Thunderf00t, “Zero Mass Water BUSTED,” YouTube, 2018. youtube.com

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SKion Water is the water technology platform of SKion GmbH, the investment company of Susanne Klatten, and yes, that is the BMW heiress. It is, by my count, the most prolific private buyer of water companies you have never read a deal price for. My Leviathan database holds 32 SKion-family acquisitions from 2012 through 2024, Ovivo and Paques included, and exactly one purchase has a disclosed price. In December 2025, the quiet compounder did something loud: it sold Ovivo’s Electronics division to Ecolab for roughly 1.8 billion dollars in cash, about twelve times the only price it ever disclosed paying. Three months later, SKion Water’s CEO Reinhard Hübner took over as Ovivo’s CEO to rebuild it. I have had him on my podcast three times since 2022, so let us replay the tapes against my database: what he said, what he bought, why he sold, what comes next.

Who owns SKion Water?

SKion Water is a subsidiary of SKion GmbH, the wholly-owned investment company of Susanne Klatten, daughter of Herbert and Johanna Quandt and holder of about 19% of BMW. Said plainly: the BMW fortune has spent thirteen years quietly building a water empire.

The man running it never planned to be there. Reinhard Hübner is an operations guy with a PhD in mathematical optimization who spent almost two years inside Thames Water working on leakage, hired into SKion in 2010 because Klatten, as he tells it, did not want an investment banker running her water bets but somebody with an industrial background.

He built what finance people call a platform, a holding company that grows by buying companies and keeping them rather than flipping them, and it is evergreen: one family’s permanent capital, no fund clock. The first water moves in 2012 were minority bets, 20% of the Dutch biotech specialist Paques and a stake in Turkey’s Miranda, and only later was the portfolio grouped into SKion Water as one umbrella, as Reinhard tells it on my 2022 tape, after SKion was named Water Company of the Year.

How many water companies does SKion Water actually buy?

On my 2022 tape, Reinhard gave me the number: “We buy 4 to 8 companies every year. Some of them are publicly announced, some not, or just announced at the local markets…” My deduped Leviathan database shows 32 SKion-family acquisitions from 2012 through 2024, 17 direct and 15 through portfolio companies, with five-deal peaks in 2019 and 2022.

My count and his do not match, so let me walk the gap. The twelve months before the conversation I published in May 2024 show three on the public record: Sanpure in India, VIGAflow in Chile, E2metrix in Quebec. Reinhard says four; his own 2022 caveat reconciles it: some deals are never announced, and a public-record database structurally undercounts a buyer who does not brag. I also removed eight duplicate records my own pipeline had double-ingested before quoting anything (counting is harder than it looks, for me too).

A bolt-on is a smaller acquisition by a company you already own, and SKion runs on them: Ovivo alone made six since 2018, the same pattern H2O Innovation ran for 25 years.

What SKion looks for before it buys

“In a technology acquisition, you have to get your head around the technology,” Reinhard says, and he means it physically: sometimes SKion buys one unit of a machine and tests it before buying the company, and he once put on the gear for digester diving himself (a real job, look it up, and pray you never need it). The scope rule is just as plain: “At heart, we are a treatment company,” meaning water and wastewater treatment plus the services and consumables around it, and explicitly not pipes and networks.

And then there is the discipline rule, which is where his dry side shows, because some business plans he gets pitched assume revenue physics nobody has ever observed.

His own distinction is worth keeping: with a system integrator, the reference plants tell you whether they can do the job, while a new technology has to prove itself across many different applications before you can trust it.

Who sells their water company to SKion?

At least 9 of the 32 acquisitions in my database have a documented family or founder on the selling side. ENWA came from the Hanssen family explicitly as a succession-planning sale, GEAL from its two founders, Malmberg Water from a family-owned Swedish group, and the founders of Faxon and Sanpure both stayed on as shareholders. Succession, much more than auctions, is this platform’s native deal flow.

On the 2025 tape, Reinhard explained why that works, the closest thing to a sales pitch I ever heard from him. SKion will never be the highest bidder, he says, because it sells permanence instead: by his telling, nobody left Ovivo after SKion bought it off the stock market. Then comes the line I keep replaying.

A succession sale, to give it its name, is a founder or family handing over a business they cannot or do not want to run into the next generation, and it is the one situation where the buyer’s story can beat the buyer’s price. If you want to see who else hunts in that pond, I keep a map of every investor active in water tech.

What is the turnover of SKion Water?

There are no public filings, because SKion Water is private, so the only first-party numbers in existence are on my tapes. On the 2024 one, Reinhard told me: “If you take 2020 as a reference year, we almost tripled in turnover between 2020 and now. We were $500 million-ish in 2020. We’re $1.4 billion budgeted this year.” The 2025 tape adds the proof-of-method on one branch: EnviroChemie had 90 million euros of turnover when SKion bought it in 2013, and the group around it does 350 million today.

Stranger still is how little machinery sits on top. SKion Water is a decentralized holding, meaning the companies keep their names, management, and culture, and the center stays so thin that a group budgeted at 1.4 billion dollars had, by Reinhard’s own 2025 account, no group treasury at all. The price of that choice is real, since European reporting rules like CSRD assume a center that produces paperwork, so a SKion Water Academy now trains the companies instead.

Why did SKion sell Ovivo’s Electronics business to Ecolab?

On August 12, 2025, Ovivo and SKion announced the sale of the Electronics division (ultrapure water for chipmakers) to Ecolab; it closed December 16, 2025, for roughly 1.8 billion US dollars, all cash. For scale: the 2016 take-private, alongside Quebec pension fund CDPQ (30%), paid C$4.00 a share, about 185 million Canadian dollars (142 million US then), the only price SKion ever disclosed. Quick maths: 1.8 billion over 142 million means one division sold for over twelve times the entire company’s 2016 valuation.

Why sell, when the pitch is permanence? The market answer, 2025: “valuations have gone up to a level that personally I think long-term is not healthy,” which politely means: offered silly money, even a permanent owner does the math. His portfolio answer was already on my 2022 tape.

A carve-out is selling one division while keeping the rest; this one cut cleanly because semiconductor water shared nothing with its siblings; Ecolab’s release names its motive: a bigger position along the AI value chain. I dissected the consequences in What the Ovivo Deal is Changing for YOU, and the next one is a click away subscribe.

What happens to Ovivo now?

Three weeks before the deal closed, I sat with Reinhard and the Ovivo team, and he set a clock on the record: “In 10 years, Ovivo will be back at the size where it is today. No doubt.” The ingredients he names are specific: Cembrane’s silicon carbide membranes rolled out across the whole group, PFAS destruction as a second growth engine, and a North American industrial business modeled on Europe’s 350-million-euro EnviroChemie group, targeted at 200 to 300 million dollars. His timeline answer could come from a project manager: “Give me 18 [months], because first we need to close the transaction.”

The carve-out mechanics are unglamorous and he does not hide them: transition services, the contractual period where the seller keeps running systems for the buyer, people moving between entities, plus the odd bonus that Ovivo’s head office, drilled by listed-company years, now lends the group capabilities it never built. Then, four months after our conversation, came the kicker: on March 31, 2026, Reinhard himself took over as Ovivo’s CEO, succeeding Marc Barbeau, on top of his SKion Water duties. The man who opened my 2022 tape with “I’m not an investor” went from operator to investor and back to operator, and he owned his words doing it.

Scoring the slowdown promise, two years on

This has become a running gag between us, and I planted it in the episode’s cold open: every conversation with Reinhard or his colleague Dirk Brusis starts with some variant of “actually, we are slowing it down a bit.” Then, minutes later in the same conversation: “We did 4 acquisitions, there’s 2 more in the pipeline.”

So let us score the May 2024 claims with two years of hindsight. Pipeline deal number one materialized four months later, when Malmberg Water joined through ENWA in September 2024, a lovely Russian doll given that ENWA itself had only been bought the year before. Pipeline deal number two never surfaced publicly, which means it either quietly closed or quietly died, and I genuinely cannot tell you which. And 2025 closed with zero visible acquisitions and one 1.8 billion dollar sale, so the slowdown finally arrived, in the loudest way available to a quiet company, though his own wave theory (“you acquire and then at some point you also have to do the homework”) plus the 18-month rebuild clock say the machine restarts soon.

What does the EPA’s PFAS rule have to do with a German buyer?

On April 10, 2024, the US EPA announced the first federal drinking water limits for PFAS, the synthetic “forever chemicals”: 4 parts per trillion for PFOA and PFOS, with compliance due by 2029. A part per trillion is roughly one drop in twenty Olympic pools. Days later, at the Global Water Summit in London, Reinhard said the quiet part: “It’s hard to achieve and it’s impossible to pay for, but PFAS is a real problem…”

By May 2026, the EPA had come most of the way to his position, proposing to keep the PFOA and PFOS limits but extend compliance to 2031, and to rescind the other compounds’ limits entirely. The affordability call aged well, and it explains the buying: SKion first invested in, then acquired E2metrix, the Quebec electrochemical PFAS-destruction company, because destroying the molecule where you catch it beats trucking contaminated filter media around. On the 2025 tape, PFAS is an Ovivo rebuild pillar, with the know-how sitting squarely in North America (“nobody knows more about PFAS than these guys here”, and, as he corrected himself, girls).

The buyers’ leaderboard nobody publishes

Since I have the database open anyway, here is SKion next to everyone else, because the biggest buyers in water are not who you think. By distinct targets 2012 to 2025 in my Leviathan database, the volume kings are utility consolidators and point-of-use roll-ups: American Water 145, Essential Utilities 128, Waterlogic 99. A roll-up is the strategy of buying many small similar businesses to build one big one, and buying ten municipal systems a year, every year, is a different sport from buying technology companies.

Filter for the technology game SKion actually plays and the tier reads: Suez 48, the engineering consolidator Stantec 48, Evoqua 28 before Xylem absorbed it in 2023, and SKion right among them with 30 distinct targets across its 32 deals. One difference: every other name there publishes prices, files accounts, or answers to shareholders, while SKion discloses essentially nothing and answers to one family. Which is why you read it the way we just did: three tapes, four years apart, checked against a deal graph it never knew existed.

FAQ

Who owns SKion Water?

SKion Water is a subsidiary of SKion GmbH, the investment company wholly owned by Susanne Klatten, the BMW heiress and Germany’s wealthiest woman. It groups her water technology holdings (Ovivo, Paques, EnviroChemie, ELIQUO, Adasa, ENWA, and others) under one umbrella, led by Reinhard Hübner, who has run Klatten’s water investments since 2010.

What is the turnover of SKion Water?

No public filings exist. The only first-party figures are Reinhard Hübner’s statements on my podcast: roughly $500 million in 2020 and $1.4 billion budgeted for 2024, before the 2025 sale of Ovivo’s Electronics division removed a large semiconductor-water business from the group.

Who owns Ovivo?

SKion Water has owned Ovivo since the 2016 take-private (70% at first, 100% since 2020, after buying out partner CDPQ). Ovivo’s Electronics division was sold to Ecolab in December 2025; the rest of Ovivo remains a SKion Water company, with Reinhard Hübner as CEO since March 2026.

How many companies does SKion Water buy per year?

Reinhard Hübner’s own figure is 4 to 8 per year, including deals that are never publicly announced. My Leviathan database verifies 32 SKion-family acquisitions from 2012 to 2024, averaging about 2.5 visible deals per year with peaks of five in 2019 and 2022.

Why did SKion sell Ovivo’s Electronics business?

Two reasons on tape, one in Ecolab’s release: semiconductor ultrapure water shared zero overlap with the rest of the portfolio, valuations had risen to levels the CEO called long-term not healthy, and Ecolab paid roughly $1.8 billion in cash to extend its AI-and-semiconductor water platform.

Will Ovivo grow back after the Ecolab deal?

That is the stated plan: “back at the size where it is today” within ten years, built on Cembrane’s silicon carbide membranes, PFAS destruction, and a new North American industrial water business targeting $200 to 300 million in turnover, with Reinhard Hübner now running Ovivo directly.

The thing to watch is the deals nobody announces

I will leave you with the two bets Reinhard says come next. One is water recycling, since “the water is running out in many places,” and he now counts Germany among them, a sentence he admits he never expected to say. The other is modular, off-site plant building, factories assembling treatment plants from forty-foot modules so nobody has to run a multi-year construction site inside a customer’s facility. Map those two onto a fragmented industry where maybe a hundred companies worldwide have the profile to become platforms (I ran that screen in my newsletter, and the bottleneck is real), and you get a fairly precise picture of SKion’s next decade: more family successions, more quiet local-market deals, and somewhere down the line, the rebuilt Ovivo proving the model twice. The press releases will tell you almost nothing, and that is rather the point: with SKion Water, the deals worth knowing about are precisely the ones nobody announces, which is why I will keep my database open and the microphone on.

Sources

1. Bloomberg Billionaires Index, “Susanne Klatten” · www.bloomberg.com
2. SKion Water, “About us” · www.skionwater.com
3. Ecolab, “Ecolab Closes Acquisition of Ovivo’s Electronics Ultrapure Water Business”, December 2025 · www.ecolab.com
4. Evertiq, “Ecolab to acquire Ovivo’s electronics business for $1.8 billion”, August 15, 2025 · evertiq.com
5. Ovivo, “Ovivo announces Completion of Acquisition by SKion and la Caisse”, September 2016 · www.ovivowater.com
6. Water Online, “SKion And La Caisse Partner To Acquire Ovivo For Cash Consideration Of $4.00 Per Share; 38% 30-Day VWAP Premium”, July 2016 · www.wateronline.com
7. PE Hub, “Ovivo to be acquired by SKion, CDPQ in $185 mln deal”, 2016 · www.pehub.com
8. SKion Water, “Malmberg Water becomes part of ELIQUO”, September 17, 2024 · www.skionwater.com
9. Ovivo, “Ovivo Announces Leadership Transition”, January 2026 · www.ovivowater.com
10. Smart Water Magazine, “Marc Barbeau to step down as Ovivo CEO, Reinhard Hübner named successor”, January 2026 · smartwatermagazine.com
11. Federal Register, “PFAS National Primary Drinking Water Regulation”, April 26, 2024 · www.federalregister.gov
12. US EPA, “Proposed PFOA and PFOS Compliance Extension Rule”, proposed May 18, 2026 · www.epa.gov
13. US EPA, “EPA Announces It Will Keep Maximum Contaminant Levels for PFOA, PFOS”, May 2025 · www.epa.gov
14. White & Case, “EPA partially rolls back PFAS drinking water rule”, 2026 · www.whitecase.com

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