'Water tech’ finally ready to rise amid California’s drought

Apr 22, 2015

(SFChronicle) - In a tech-obsessed state that’s part desert, creating new technologies to save or clean water should be a no-brainer.

But even though water technology helps preserve the most precious resource on Earth, startups in the field have struggled for years to attract the level of investment and attention showered upon social media, solar power and sharing economy companies.

California’s four-year drought may change that. As water agencies scramble to make deep cuts after another dry winter, water tech may finally get its moment.

“I’ve been running around saying, 'Hey, let’s not waste a drought of this magnitude,’” said Sheeraz Haji, CEO of the Cleantech Group consulting firm, which has tracked and encouraged water-tech investment for years. “We have a unique opportunity here to bring capital to innovation.”

Investors have been slow to dive in. Worldwide venture funding for water startups totaled just under $1.5 billion in the last five years, according to the Cleantech Group’s i3 information service. Companies that help save energy, in contrast, raised $1.6 billion in 2014 alone.

Investors have been scared off by the fragmented nature of the American water market. Water is delivered by a patchwork of small, risk-averse utility companies and public agencies that tend to buy only the equipment they absolutely need. They make every effort to keep water prices low, so big users often don’t have much financial incentive to conserve. Government regulations vary from state to state.

And while the federal government has made a concerted push to encourage other types of clean technology, such as electric cars and renewable power, that hasn’t happened with water.

“For whatever reason, it just hasn’t had the political attention,” Haji said.

Now, Gov. Jerry Brown has ordered a 25 percent overall drop in the state’s urban water use, with mandatory cuts of up to 36 percent for the state’s 400 largest water agencies. Water-tech startups that can help agencies make those cuts suddenly find their products in demand.

“We’re definitely getting a lot more inquiries,” said Robin Gilthorpe, CEO of WaterSmart Software in San Francisco. “We’re cranking pretty hard on the sales side. This (drought) is a very unusual situation, and it turns out we have something that can be part of the solution.”

WaterSmart employs big-data analytics — computer programs that quickly crunch huge amounts of information — to root out water waste. Utilities hire the company to help individual customers track and analyze their water use via computer, tablet or phone.


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