Investing in Water - a Practical Guide

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Investing in Water - a Practical Guide

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Executive summary

Impact investors recognize the profound potential of early-stage entrepreneurs as catalysts for transformative change. Backing early-stage entrepreneurs offers the opportunity to shape the trajectory of meaningful ventures from their inception, helping them to grow and ensuring alignment with investors’ core values.

While investing for impact has been steadily gaining traction, particularly in the clean energy sectors, water is an often-overlooked area of opportunity in the impact investing space.

Water plays a critical role in virtually every aspect of human life. This is underscored by WWF findings that the total global quantifiable economic use value of water in 2021 was estimated to be $58 trillion – or the combined GDPs of China, Germany, India, Japan and the United States.1 Consequently, the water market is immense. In 2022, global brands reported water-related opportunities valued at $436 billion,2 while worldwide water and waste-water treatment markets were valued at $301.77 billion.3 Yet for now investors are not seizing the opportunity at hand.

As part of the Aquapreneur Innovation Initiative objective to drive investment in water innovation, in autumn 2023, UpLink – World Economic Forum teamed up with the European Water Tech Accelerator to provide interested impact investors with a well-rounded introduction to the water investment landscape. The resulting series of workshops, “Water Investment for Non-Water Investors”, was intended to provide potential investors with insights into the water sector, including trending  innovations, regulatory considerations and investment strategies.

With water often being a technical and jargon-heavy sector, this series aimed to break down some of the barriers to entry for newcomers, while highlighting the strong interrelation of water with other sectors. Collected here are the top insights for potential water investors:

– Understand regulations and the market: The water market presents significant opportunities for high returns due to its vast size and relatively few players. However, a holistic view is required when investing in water. It is imperative to first understand potential regulatory barriers as well as market needs and size. Engage with the water sector systematically, not opportunistically.

– Invest with those with expertise: When starting to invest in water, invest with others. The water sector is a welcoming community, and open to guiding first-time water investors on their journey. Bundle your first co-investment with others.

– Shape the market: As a nascent marketplace, first-mover investors can shape localized and regional water markets, enabling innovation, finance and policy levers. Be a positive driver of change for people and planet. – Find start-ups with water expertise: When assessing the strength and potential return on investment (ROI) of a start-up, check its team members’ technical understanding of water barriers and opportunities in their target market.

– Act early: Water will become increasingly important over time. Join a growing global coalition of organizations as an early mover, solving water challenges through innovation. Acting early provides the opportunity for greater impact and greater returns.

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