Some 80% of climate impact is about having too much or too little water, yet water makes up just 3% of climate tech investment. There is an opportunity here.
Photo credit: Adam Bacher
Corporate venturers and business executives underestimate how critical water innovation is to future-proofing their business, Sivan Zamir, head of innovation and venture at Xylem, a multinational water technology company, told an audience at GCV’s recent GCVI Summit in Monterey.
“Water, right now, makes up 3% of all climate tech investment,” she said. “That’s abysmal because […] over 80% of climate impact is experienced by having too much or having too little water.”
Zamir attributed the underappreciation in part to the fact that in our daily lives water infrastructure is out of sight. And – at least in some developed countries – consumer water bills are usually subsidised so that they are relatively cheap. As a result, it is often taken for granted. “The only time you notice there’s a water issue is when it’s not working,” she said.
She told the audience that AI and climate prediction technology are essential for business continuity for businesses that rely on water as a resource.
“A lot of different satellite sensing and artificial intelligence capabilities and technologies can help figure out where you’re about to have too much water. And so you might then deploy dewatering pumps […] in order to continue your business operations and not have those disrupted,” she said.
“And then on the other side of it, in terms of not having enough water, [technology can help in] understanding where you have water underground, assisting with leak detection.”
CVCs can partner to speed the path to commercialisation
Xylem invests in and develops water and wastewater technology startups through Xylem Innovation Labs, which Zamir founded. Launched in 2022, the unit invests like a classic corporate venture arm and has incubator and accelerator programmes. It established a $50m fund in July 2024 to invest in startups working on climate change related challenges.
Zamir told GCV on the sidelines of the event that she believes that getting Xylem Innovation Labs to partner with other corporate venture units would be an effective way of driving innovation in the industry.
“Our product, engineering, and sales teams want to know that there’s customer confidence and demand,” she says.
“And so, we can help generate some of that demand by getting market feedback and validation through the CVC to CVC interaction. It’s not the only way, but it’s a way of doing it.”
AI will increase the need to manage water well
A rapid increase in the use of AI will increase the need for good water management, says Zamir, as a typical 15-megawatt data centre uses as much water as three average US hospitals.
With the rapid increase in demand for data centre space only likely to continue, the sector is a valuable vertical for water tech innovation. Zamir told the GCVI audience that areas where innovation could be useful include finding ways to reuse the water that is being used by data centres, usually in cooling.
She added that Xylem is also interested in more efficient cooling processes that might use less water.
Requiring multiple pilots can kill a project before commercialisation
Speaking to GCV on the sidelines of the event, Zamir said that one common roadblock to commercialising a new water technology is what she calls “death by pilot”.
In a fragmented industry like water, which is made up of many different utilities with their own corporate cultures and preferred ways of working, there is often reluctance to adopt a technology that has been tested elsewhere. Instead, individual companies insist on having their own pilot.
“It’s like that piloting valley of death,” Zamir says, “where everybody wants to pilot something as if it’s brand new, even when it’s proven out technology and it’s been used in similar applications and dozens of other locations.”
“[The question is] How do we unify the sector, increase trust, and not have to reinvent the wheel of piloting the technology.”
A water utilities consultancy group called Isle Utilities has attempted to get around this by setting up loan programmes for pilots, where a pool of funding is set up by Isle and additional sponsors, one of which is Xylem.
Here, the technology vendor can draw on a loan to fund the pilot so the end user does not take on risk upfront. The end user contracts to purchase more of the technology if certain agreed milestones are reached, so that a successful pilot is guaranteed to roll out. And if the pilot is not a success, the loan does not have to be repaid.
“By doing that, you’re doing a couple of things,” Zamir says. “One is you’re helping smooth out that curve from commercial installation, which is helping to change culture and how people operate. And then the second thing is that anybody who’s a sponsor of the Trial Reservoir [the pool of funding] gets access to those results.”
“And so now we have a whole body of technology providers like Xylem and other utilities that are getting access to these pilot results and then develop confidence in the technique.”
