Investing in Water Aligning Investment Strategies with Water Innovation 2025

This growing recognition of water’s strategic importance is increasingly being reflected in financial behaviour. New data, highlighted in this section, shows that the momentum behind water sector investment is accelerating, with a wide range of market actors signalling a significant increase in their commitments. Venture capital activity particularly highlights this trend. While water technology still represents a relatively small share of overall climate tech funding, it is slowly emerging as a leading area of interest. In 2023, water tech companies received $1.2 billion in funding, a 30% decline from 2022’s record of $1.8 billion yet still outperforming the -38% average market drop and the -33% decrease in the wider climate tech sector.21 While that $1.2 billion represented only 3% of the $48 billion raised in climate tech in 2023,22 it is 105% above 2019’s pre- pandemic levels. According to the Currents of Capital 2025 Report, a survey of more than 300 senior decision- makers throughout the global water value chain, including water utilities, multinational corporations, investment funds, engineering firms and technology providers, investment is accelerating across water infrastructure and related technologies. The report reveals that 40% of respondents now view water as their top investment priority, while 33% are focused on portfolio growth. Notably, approximately 4% of respondents plan to increase their investments by over 50% compared to 2024 levels, with multinational corporations (12%) and contractors (6%) leading this surge.23 Private equity is playing a considerable role in consolidating assets, scaling solutions and modernizing infrastructure. While the public sector currently supplies around 78% of the capital for water security, this dominance is set to shift. According to Global Water Intelligence, a publisher and events organizer serving the international water industry, public-sector contributions will fall to just 43% over the next decade, even as total investment in water security-related assets is projected to more than triple: from $3.8 trillion to $12.6 trillion.24 This transition is already under way. Ofwat, the UK’s water regulator, is looking to secure more than $66 billion in private investment for critical infrastructure projects, offering attractive terms such as guaranteed revenues, capped liabilities and government-backed risk mitigation.25 Similarly, the European Investment Bank (EIB) pledged to invest more than $17 billion in water-related loans over the next three years, aiming to mobilize an additional $29 billion from private investors.26 These developments signal growing confidence in the water sector’s investment potential and reflect a broader rebalancing of responsibility between the public and private actors. In addition to varied investment pathways, the water solutions space also shows overall momentum in terms of deal trends and exit potential. Valuations and deal sizes in the water technology sector have been steadily increasing, with the median pre-money valuation more than doubling since 2020 to reach $16.9 million in 2024.27 In the same year, three notable deals surpassed $50 million, including Nautilus Data Technologies, ZwitterCo and Nattergal, reflecting growing investor confidence in the sector.28 Strategic acquisitions by major players such as Thermo Fisher Scientific29 and Badger Meter30 also signal increasing interest and create additional exit opportunities for emerging companies. At the same time, supportive regulatory environments and strengthened corporate water stewardship commitments are enhancing the sector’s overall attractiveness and long-term growth prospects.31 Part of the growing interest from new entrants in the water sector stems from the perception of water investments as stable and recession-resistant. Water is a critical, non-cyclical, irreplaceable resource with consistently strong demand that is projected to grow over time, driven by population growth, urbanization, industrial expansion and shifting consumption patterns.32 Unlike many sectors, water’s essential nature renders it largely immune to short-term economic fluctuations or changes in consumer behaviour, making it a stable underpinning to an investment in water solutions. Water-related investments have demonstrated resilience across economic cycles. During the 2007–2009 financial crisis and the COVID-19 pandemic, utility stocks, including water utilities, were favoured by investors seeking stable dividend payments amid declining bond yields.33 The regulated nature of many water utilities supports reliable cash flows and long-term stability.1.4 Growing investor interest $1.28 billion amount of funding in water tech in 2023, over twice 2019 levels, even amid wider declines. Investing in Water: Aligning Investment Strategies with Water Innovation 11