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2010 U.S. Drinking Water Innovation Vendor Outlook - Report on the Companies and Market Trends Shaping Innovation in the U.S. Drinking Water Sector
Citation:
Javier, M., G. Neichin, AND S. Haji. 2010 U.S. Drinking Water Innovation Vendor Outlook - Report on the Companies and Market Trends Shaping Innovation in the U.S. Drinking Water Sector. U.S. Environmental Protection Agency, Washington, DC, EPA/600/R-11/028, 2011.
Impact/Purpose:
To inform the public.
Description:
Innovation in the water sector is unanimously viewed as critical to meeting water challenges that will emerge in the 21st century. However, a large number of open questions remain around the speed at which innovation must occur, where financing of development will come from, and what types of companies are best positioned to address these emerging needs. An analysis indicates that the total water equipment market in the U.S. in 2010 is ~$28 billion across drinking water, wastewater, and industrial water – a massive commercial opportunity for vendors, service providers, and innovators. Despite the size of this opportunity and interest on the part of venture investors, the water sector has significantly lagged other cleantech sectors in the amount of institutional venture capital devoted to companies in the industry. Venture capital (VC) investment in water has been particularly underrepresented in the United States; the U.S. typically garners ~60% of all global cleantech venture investment, yet has captured less than 30% of investments in the water sector in 2010. Venture investors have been hesitant to deploy significant capital in the sector due to perceived obstacles in penetrating large customers, uncertainty around regulation, long pilot cycles, opaque economics, and large capital needs to take some projects to scale. Venture investors have been attracted to opportunities targeting industrial water use where the sales cycles to commercial and industrial users is seen as more straightforward, as well as wastewater opportunities where by-products can be more easily monetized. Drinking water has been perhaps the most challenging market for new companies to enter. We classify innovation in the drinking water sector into three key areas: water treatment/disinfection, filtration/membrane treatment, and system monitoring & metering. Our analysis finds that the market opportunity in the U.S. drinking water sector distributed across these three key areas to be ~$1.2 billion.