The worst drought in California in more than a century may actually be carrying some good news.
California-based water technology companies received the largest amount of venture capital investment over the last five years of any state in the U.S., says a new report from Next 10, which describes itself as an independent nonpartisan organization that educates, engages and empowers Californians to improve the state’s future.
(Listen to a CVBT Audio Interview with Next 10 Founder Noel Perry about the report and how it connects to the Central Valley by clicking on the link at the end of this article.)
In 2014, investors provided nearly $97 million to California water companies, or 38 percent of the U.S. total, the report says. And last year, “California registered nearly twice as many water patents as the next leading state of Texas. Over the last decade, water technology patents have grown steadily, reflecting growing research efforts,” it says.
The report offers a snapshot of how some businesses are finding new opportunities in the drought.
“The market potential for water technologies is notable,” the report says. “For example, by 2030, reducing municipal water leakage presents a $167 billion global market value opportunity and improving irrigation techniques hold a $115 billion opportunity.”
The report finds that venture capital has been invested in water technology companies across the state. However, it notes, the bucks from the venture capitalists tend to concentrated in urban areas and don’t find their way to the heart of drought country, the Central Valley.
“The San Diego region received the majority of water venture capital in 2014, including for the company Underground Solutions which developed new water infrastructure products. In the Bay Area, several water efficiency companies received investment in 2014 and 2015, including WaterHero, WaterSmart Software, and The Detection Group,” the report says.
In terms of patents on various aspects of water technology, inventors in the San Joaquin Valley got six patents last year, while those in the Sacramento region got five. The Bay Area’s inventors, however, received 38 water-related patents in 2014, the most of any region.
“California is building on its innovation strengths to meet the increasing demand for water solutions in response to the state’s extreme drought and water shortage challenges,” the report says in conclusion.
But it adds a cautionary note.
“California needs new business models to accelerate the adoption of new products and services. Innovators are striving to push the envelope on solutions, while consumers, industries and utilities are increasingly applying solutions that are driving the state towards a more water-efficient future. Water solutions are critical for solving California’s water needs and the state is primed to meet this challenge through innovation,” the report says.