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CORRECTED-Threat of drought and increasing population prompt water tech to slowly come out of the shadows

February 1
1:10 PM 2014

(Corrects sentence in third paragraph.)

While history has proven that water technology investments have been quite low, the threat of drought and a fast-growing population has began a change, slow it may be, in that area, Gigaom reported.

This is also the reason why Imagine H2O, a startup and nonprofit based in San Francisco, has recently started to help organize and support emerging water innovations. Imagine H2O sponsors a water technology startup contest and accelerator program each year, offering the winners cash and the chane to undertake their pilot projects with water utility companies, growers and food processors. These activities enable the water innovators to prove that their technology is viable. Just recently, Imagine H2O selected 12 finalists for its competition and intends to unveil the winners in March, the report said.

However, venture capitalists may not be very keen in supporting these water tech startups sometime soon after many of them did not do so well in their clean tech investments. In an interview, Imagine H2O Chief Operating Officer Scott Bryan told Gigaom, "Water historically hasn't fit the traditional venture capital model. That said, you are seeing more activities from corporations and family offices acting as strategic investors."

The report said that one reason why the water business is so hard to get into is because even if the rates of water are increasing in some parts of the country, it still is a cheap commodity. Add this to the complex procurement process and lack of funds of water utilities. They are not also open to trying new technologies that don't hold a lot of concrete operating data yet, the report said.

However, water startups will find that corporate investors and family offices as better sources of capital since they are not under pressure to come up with funds and post large returns. In order to continue with its operations, Imagine H2O is dependent on the backing it receives from private foundations and corporate sponsorships, the report said.

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