Tom Ferguson

Tom Ferguson did not set out to become a water investor. He got into water by what he calls dumb luck: as the cheapest person at the sustainability consultancy ERM, he was handed a pro-bono report for the Carbon Disclosure Project back in 2008, spent three months inside the water data of 150 of the world's biggest companies, and came out knowing more about corporate water than almost anyone, mostly because nobody else cared. He found water fascinating precisely because it was, in his words, so obviously totally vital and totally overlooked, and he filed that away until he re-specialized in 2015.

Tom Ferguson then spent five years running the accelerator at Imagine H2O, the non-profit that has put hundreds of water startups through its program, and that is where Burnt Island Ventures was really born. Seeing that many companies a year builds what he calls diminishing marginal surprises, the muscle memory of knowing what good and bad look like in water, and he came to believe that gave him an unfair advantage: a credible case to make to the kind of investors who, as he puts it, don't know anything about water, which is basically all of them. So in 2020 he started Burnt Island as a seed fund that would do only water.

Tom Ferguson's thesis is contrarian, and it is the reason this page is worth reading. Most generalist investors look at water and see everything that makes it hard, the RFPs (the formal Request-for-Proposal procurement that utilities run), the long sales cycles, the regulatory drag, and they walk away calling it uninvestable. Tom Ferguson flips that on its head, because the very features that scare people off are the moats: win an RFP and they're never uninstalling you, so you get repeatable revenue for years and your customer acquisition cost amortizes into nothing. He points to a portfolio company, Daupler, with a net revenue retention of 244 percent and near-zero churn, as proof that water businesses can have economics most software founders would envy. He is one of a small but growing set of specialists in the water investor landscape.

Tom Ferguson invests the way Charlie Munger thinks, by inversion: avoid the dumb things first, then try to be brilliant. The quote on the Burnt Island website is Munger's own, everybody's trying to be brilliant, I'm just trying to not be idiotic, but it's harder than most people think. On top of that discipline sits his one real bet on the market, which is that the thing that changed around 2020 was not the technology but the quality of the founders. Better founders pick better problems and build faster, and that, he argues, can compress the decade-plus it has historically taken a water company to scale. He calls the market a behemoth, a trillion dollars of existing CapEx and OpEx that is going one way upwards, and there is nothing that anybody can do to stop it.

Tom Ferguson is worth listening to, beyond the thesis, for how he sees his own job once the money is in. He sits on the boards of several of his companies, and his rule there is simple and unusually human for venture capital: you can never put a price on bad news. If a founder is scared to tell you when something breaks, you have built the wrong relationship, so the whole game is keeping the information flowing. As of late 2025 he is doing this from Brooklyn, where he runs Burnt Island as a small distributed team, having closed Fund II with the water-technology giant Xylem anchoring the raise.

“We cannot ever put a price on bad news. Because if you set up an incentive structure where you scream and shout and insult them, they're much less likely to tell you the next time something else goes wrong. That's why people talk about trust, and it always sounds very hand-wavy and silly, but it isn't. It's about information flow.”

Tom Ferguson is, in the end, the investor who decided that the way to win in water was not to be a tourist in it, and the next few years, as his portfolio reaches for the sector's first real exits, are when that bet gets graded.