Photo by mrjn Photography on Unsplash
Water is essential for life and central to innumerable human activities. So we feel water is a uniquely strong investment opportunity that, driven by global warming and other factors, is only getting stronger.
Even before COVID, people were growing increasingly interested in preserving access, assuring purity, and reducing the environmental impact of processing water. COVID, with its new focus on the home as life’s center, is accelerating that desire among people to control their water supply. In addition, with the rise of SDGs and future anticipated risks, the economic imperative to turn the world’s water crisis around is stronger than ever - world bodies have begun encouraging appropriate programs to decrease environmental degradation and increase global water supply.
When we first articulated our focus on Water more than a year ago, few companies or funds were active here. Now we’re seeing double the number of companies showing leadership on water issues, and they are just the tip of the iceberg.
So far, we have been looking at both consumer-facing and infrastructure aspects of water. Now, after a year evaluating companies, we feel the risk/reward of water infrastructure is not optimal. By contrast, the consumer-based water opportunity continues to look like a prime target. Therefore, our new Water focus factors for midyear 2020 are “Decentralized Water Businesses for Consumers” (DWC):
Clients/users of DWC companies are consumers, not infrastructure companies/municipalities.
DWC delivers water experience at the individual level.
Production: Air-to-water or other tech to produce water for individuals outside the grid.
Refinement/Filtration/Purification: Processing water for each application at home.
Purification/Preparation: Personalizing water at home; desalination/purification at the individual level.
Storage: Maintaining water supplies under individual control.
Key word = ”more;” more immediate, more personal, more environmental than previous product norms.
Can be a water product for drinking, cosmetic use, etc. Brand matters.
Environmental packaging or low impact delivery is essential.
Emerging technologies will encourage the decentralization of water businesses to mitigate future anticipated risks and to improve individual life and wellbeing. Still, this still remains a complex and uncertain space, so we should only invest when outcomes are clear. We will seek worldwide potential; not local solutions, and never infrastructure.
By Managing Partner Mike Edelhart
@MikeEdelhart
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