The food-water nexus is becoming an increasingly actionable opportunity for financial and impact technology investors
It should come as no surprise if you ask any grower (agriculture or aquaculture), they will tell you water is paramount for realizing their yield. Water has always been the protagonist, the hero, for growers. Unfortunately, however, water has become the antagonist, the story’s disrupter, destroying lives and livelihoods, especially in the global south. Yet, thanks to recent innovations in hardware, software, and business model, growers of all crops and all geographies can now manage water-related risks their predecessors could only dream of.
A taxonomy for making sense of the dealflow
One can generally organize deals in a 3-part taxonomy:
1) Companies with innovations that help growers to gather more accurate data from the environment, processes, equipment, and infrastructure and from the water itself, whether quantity (too much/too little), or quality (not suitable for intended use). Innovations include: In-situ sensing, IIoT, Earth observation (eg: satellite), Connectivity, Analog to digital conversion. The sensing toolbox of innovations that observe, quantify and digitize anything related to water quality and quantity and sends the data to the cloud.
2) Companies with innovations that help growers with data management (scrubbing and normalization) and to help correlate the datasets and draw inferences. Innovations include: Artificial Intelligence, Machine Learning, Deep Learning, Neural Networks, Bioinformatics, and Modeling/digital twins. Essentially, the data science toolbox of innovations that convert water-related data from disparate sources
3) Companies with innovations that help growers address the challenges of our new climate-change-induced “water reality” in the most effective and cost-efficient way. Innovations include tech that addresses water quality such as purification including membranes, filter media, electrochemistry, biomimicry, etc. This also includes tech that addresses water quantity, such as 1) Flood protection: earthworks, green infrastructure, etc. b) New water sources: atmospheric water generation, desalination, reuse, etc. and c) efficiency and stewardship including smart monitoring tools.
Dealflow & Exits
There are many venture investors in so-ag-tech that see limited water-tech deals, and there are water-tech investors who somehow overlook the opportunities in agriculture/aquaculture. Investors who are able to have a foot in both worlds will not only see more deals, but see more quality deals, helping them realize their impact or financial goals.
Corporates one might think of as ‘ag’ actually have significant investments in, and a growing appetite for, innovations that improve efficiencies and manage water-related risks. Examples include: John Deere, Valmont, Lindsay, Franklin Electric, Layne Christensen, and CNH Industrial.
Please follow-up with Mazarine for deeper discussion around this topic.