Distribuidor autorizado por Microsoft Inc.

Funding to startups working on water purification- and conservation-related technologies has not dried up in recent quarters, even amid a broad global contraction in venture investment.

That was the finding from an analysis of Crunchbase data for funding to water industry categories. Investment totals for 2023 were actually higher than during the much bubblier startup financing climate of 2021. And this year is also off to a strong start.

For a sense of how the numbers compare, we charted annual investment since 2019 to companies in the water, water purification and water transportation categories.

Taking on big problems

The biggest rounds go to companies taking on extremely large problems, commonly tapping global markets from the start.

That’s not surprising, given that there are so many areas of urgency to address. Per the World Water Forum, today more than 650 million people in almost 40 countries suffer from water scarcity. Groundwater supplies worldwide are under serious threat due to population growth, industrial development, overuse, climate change and poor water management.

Startups aren’t promoting overnight solutions, but they are offering some potentially big improvements over the status quo. That has been sufficient to attract a steady stream of funding.

Among the biggest recipients on our list is Boston-based Gradiant, a sustainability-oriented startup focused on wastewater treatment. To date, the company has raised more than $390 million in funding, including a $225 million Series D last May.

Founded at MIT in 2013, Gradiant has taken on a broad mission to reduce industrial water usage and wastewater discharge across sectors, including semiconductors, pharmaceuticals, mining and chemical processing. It’s a high-need area, per Gradiant, which says 45% of global water consumption currently comes from industry, and that 70% of wastewater is “dumped untreated into nature.”

Scottsdale, Arizona-based Source, a maker of solar-powered devices that extract drinkable water from the atmosphere, is another investor favorite. The 10-year-old company has raised over $360 million to date, with Breakthrough Energy Ventures among its lead backers. Source says its branded hydropanels are currently producing water in some of the driest places on Earth.

A wave of funding in 2024, but exits yet to materialize

So far this year, we haven’t seen a flood of water financings, but there’s been more than a trickle.

The most recent sizable financing news came last week. Los Angeles-based Avnos, a startup developing direct air capture technology that captures both carbon dioxide and water simultaneously from the atmosphere, announced that it closed a $36 million Series A round, bringing total funding to $116 million.

A month earlier, Indiana-based 120Water picked up $43 million in a growth financing led by Edison Partners. The startup offers software and digital sampling kits for water providers to oversee safety and compliance, and to manage wastewater monitoring programs.

As for exits, with the slow IPO market, we haven’t yet seen ambitious companies in water treatment or purification tapping public markets. There has been buzz around a potential offering by Santa Monica, California-based canned water brand Liquid Death, but this is more a consumer play with a negligible impact on global water supply and quality issues.

For now, however, it looks like private market resources are enough to keep the burgeoning population of sustainability-focused water startups afloat.

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