Sean Davis

Sean Davis did not come to water through engineering or a treatment plant, he came to it through a cap table. He spent the first stretch of his career in private equity, starting at J.P. Morgan and then Advent International, where he helped build the firm's office in Brazil, before moving into nonprofit fundraising in Palm Beach County. That collision of two worlds, the deal-making of private equity and the day-to-day of charities that never have enough money, is what made him notice the gap that became Merton Capital Partners, the firm he founded in 2015.

Sean Davis built Merton around a problem he calls the giving-pledge bottleneck. The Giving Pledge is the commitment, started by Bill Gates and Warren Buffett, where around 230 billionaires promise to give away at least half their fortune, which adds up to roughly $1 trillion. The catch is that there is no easy way to actually deploy money at that size. As Davis puts it, big philanthropists basically write checks to nonprofits, but they have no vehicle to invest philanthropy the way private equity invests capital, with managers and deals and scale. Merton's pitch is to build exactly that, philanthropic private equity, where the giving goes into for-profit deals, comes back with a small return, and gets reinvested into the next one, so a donor's money compounds instead of disappearing.

Sean Davis uses the broken US water map to make the idea concrete. There are about 52,000 water utilities in the country, and by his count roughly 5,000 of them are distressed or abandoned, out of money, out of compliance, and piping polluted water to around 21 million Americans. A normal private water company cannot simply buy and fix these, Davis explains, because the cost to upgrade is too high to ever clear a market return. So Merton blends philanthropy into the deal to cover the gap that the market cannot, which lets a private operator afford to buy, upgrade and run the utility. He laid the whole thesis out on the show in his 2022 conversation on philanthropic capital investment, where he argued the same logic could put a few hundred million of philanthropy into expanding South Florida's coastal wastewater capacity and bring the reefs back.

Sean Davis is the first to admit he spends most of his time evangelizing a category that barely exists. When I asked him how aware the people holding the capital are of the scale of the problem, his answer was blunt: almost zero. People have heard of Flint, he says, but they read it as a one-off headline rather than a systemic funding hole. He compares where he sits now to private equity in the 1970s and 1980s, back when firms like KKR were assembling deals one at a time before the whole thing got institutionalized, and he reckons it takes about a decade to build a new sub-sector of finance from scratch. His book, Solving the Giving Pledge Bottleneck, published by Springer and named one of Forbes' must-have reads for leaders in 2023, is the long-form version of that argument.

“All charity is good, all philanthropy is good, but what we're building are vehicles where you can buy one water utility and upgrade it, then you can do 10, then you can do 100, then you can do 1,000.”

That scale-up instinct, treating a fixed water utility like the first deal in a much longer roll-up, is the whole reason Davis thinks philanthropy can finally move the needle on problems that have outrun the public purse.