Subscribe to the newsletter:
New Wave | Hugo Rauch | Substack
****
🌊 Water’s Mispriced Opportunity
Why one of the world’s most essential markets may also be one of venture capital’s most overlooked.
Ahead of The Drop in Malmö, we’re joined by Steve Kloos, Partner at Burnt Island Ventures, a venture firm dedicated exclusively to investing in water technologies.
Water is foundational to life, and to the economy. Yet despite roughly $1.6 trillion in annual global spending, Steve argues it remains surprisingly underinvested by venture capital.
In this episode, we approach water almost like a course: starting with the fundamentals, mapping the biggest problems and technologies, and asking a more provocative question:
Could water actually be one of the more compelling venture categories today?
Steve’s thesis comes down to a simple dynamic: entry valuations remain relatively reasonable, while the exit market is getting stronger. At the same time, climate change, industrial demand and water scarcity are forcing customers to spend.
In our conversation, we covered:
→ Why water is becoming impossible to ignore, from droughts and floods to industrial growth increasingly constrained by water availability.
→ Why water has historically struggled to attract venture capital, and why Steve believes the market is beginning to shift.
→ The “buy low, sell high” thesis for water, including why entry valuations can still be significantly lower than in hotter categories such as energy, AI or robotics.
→ Why exits may matter more than IPOs, and how strategic buyers and private equity are acquiring emerging water-tech winners before they reach the public markets.
→ Where the opportunities are today, advanced treatment, desalination and reuse, software, sensing, industrial water, insurance and climate resilience.
→ Why industrial demand could become a major driver, particularly in semiconductors and other manufacturing processes requiring large volumes of ultrapure water.
→ Where investors can get caught by hype, from ballast water to large-scale atmospheric water generation.
→ How desalination could evolve, including subsea approaches designed to reduce energy consumption and environmental impact.
Steve also walks through Burnt Island’s own experience. Its 2021 vintage Fund I made 18 investments and has already recorded three exits, including SewerAI, while beginning to return cash to investors.
The broader argument is simple:
Water may still look like a difficult, specialised category from the outside. But that complexity may be exactly why the opportunity remains underpriced.
And as Steve puts it, the picture is becoming more obvious.
✨ Leave a review and share the episode if this conversation challenged the way you think about growth, innovation, and sustainability.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit newwavenewsletter.substack.com
