Tom Ferguson, founder and managing partner of Burnt Island Ventures, discusses the importance of water in the context of climate change and the need for infrastructure upgrades. He explores the different water tech categories and the role of software and hardware in water tech solutions. Tom also highlights the need for improved storytelling and lobbying efforts in the water industry, as well as the challenges and opportunities faced by entrepreneurs in the water tech industry.
Water is a crucial aspect of addressing climate change and needs to be prioritized in terms of investment and innovation.
Aging water infrastructure, coupled with changing global water systems, poses significant risks and challenges that require investment and upgrades.
The water sector offers diverse investment opportunities across hardware, software, and service businesses, focusing on improving water efficiency, infrastructure resilience, and water management.
Deep dives
Water as a Critical Aspect of Climate Change
Water is often overlooked in discussions about climate change, but it is one of the most significant symptoms of climate change. While climate change can be a polarizing topic, water-related issues like drought, floods, water contamination, and water scarcity are universally understood and acknowledged. Water serves as the primary medium through which climate change impacts are experienced, yet it receives limited attention and funding. The water sector faces challenges in telling its story effectively and raising awareness about the importance of water in addressing climate change. As the world experiences rising sea levels and increased salinity of coastal aquifers, urban environments and infrastructure face significant risks. It is crucial to prioritize water as a key focus area for investment and innovation to address the challenges posed by climate change.
The State of Global Water Systems and Infrastructure
Water systems and infrastructure, especially in the Western world, are in a precarious state. Many water and wastewater infrastructures have aged out, and federal funding in the US for water infrastructure has only recently started to recover. The overall infrastructure is crumbling, unnecessarily losing large amounts of treated water, and facing challenges in meeting demand. Aging water infrastructure, coupled with changing global water systems, such as increased peaks in water usage and changing precipitation patterns, pose significant risks and challenges to water suppliers and consumers. The need for investment and upgrades in centralized and decentralized water systems, including drinking water and wastewater treatment infrastructure, has never been greater.
Categories in Water Technology and Investment Opportunities
In the water sector, there are various categories or verticals to consider. These include drinking water, wastewater, commercial, industrial, agricultural, and consumer water. Each category presents unique challenges and opportunities for innovation, investment, and improvement. For instance, access to clean and safe drinking water remains a priority, while agricultural water usage accounts for a significant portion of global water consumption. Additionally, water-related consumer products and services, such as faucets, showers, toilets, and water purification systems, represent an important market. Advances in digital technologies, such as monitoring and sensing, are also transforming the water sector. Overall, the water sector offers diverse investment opportunities across hardware, software, and service businesses, focusing on improving water efficiency, infrastructure resilience, and water management.
Challenges in Water Infrastructure and Conservation
The podcast episode explores the challenges and considerations in water infrastructure and conservation. It emphasizes the importance of accurate lead detection systems, ensuring efficient pumping of water, and monitoring the operating efficiency of pumps. The episode also discusses the desire for large-scale change in various sectors, such as semiconductor manufacturing and domestic oil and gas. The need for resilient and adaptable solutions, decentralized drinking water treatment, and advancements in software, hardware, and infrastructure are highlighted as areas of interest.
Investment Focus and Criteria of Burnt Island Ventures
This section provides insights into Burnt Island Ventures' investment focus and criteria. The fund primarily focuses on early-stage investments in the water sector. While they anticipate a balance between software and hardware solutions, they have observed that most compelling arguments come from hardware-based companies. The fund is particularly interested in entrepreneurs who can articulate the pain points, value propositions, and products to solve water-related challenges. They have a flexible investment approach, targeting pre-seed, seed, and Series A stages, and aim to provide $600k to $1.25 million per company. The podcast also mentions the launch of "The Fundamental Molecule," Burnt Island Ventures' podcast, which aims to support and provide insights for water entrepreneurs.
Tom Ferguson is founder and managing partner at Burnt Island Ventures, which is an early-stage venture capital fund focused on technologies related to water. Burnt Island's website notes that climate change is water change. And that water is the medium through which we will feel the effects of a warming earth.
Tom has been working in water for over a decade, first at the sustainability consultancy, ERM, then at Imagine H2O, a non-profit startup accelerator for water startups. He’s been at Burnt Island Ventures since 2020.
Tom and Cody have an in-depth conversation about the categories in the water tech space, the types of startups that are emerging, how incumbents are navigating the rapidly changing environment in which they find themselves, and the types of investments he targets with this firm. There are whole episodes to be recorded in each of Burnt Island Ventures' focus areas, but for now we appreciate learning about water from Tom’s perspective.
In this episode, we cover:
Importance of water in the context of climate change
Changing global water systems and the need for infrastructure upgrades
Burnt Island's approach to different water categories
The role of software and hardware in water tech solutions
Corporate water pledges
The importance of embracing entrepreneurial innovation while balancing production success
Burnt Island's portfolio breakdown
The need for improved storytelling and lobbying efforts in the water industry
First-of-a-kind projects in the water space
Tom's climate journey and how he ended up at Burnt Island
The investment focus and criteria of Burnt Island Ventures
The launch of the podcast "The Fundamental Molecule" by Burnt Island Ventures
Episode recorded on Dec 7, 2023 (Published on Jan 9, 2024)
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