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Untapped Potential
Courtesy Tom Ferguson
“Climate change is really water change,” says Tom Ferguson (MBA 2014). From the deadly floods that deluged western Europe in the summer of 2021, to the once-in-a-century drought conditions that have ravaged Brazil for three years, to the estimated 100 million people in China, India, and Bangladesh alone under threat from rising sea levels by 2100, “water is the medium through which climate change is really going to be experienced,” Ferguson says. “Our ability to steward the water molecule is going to be fundamental to our ability to respond to whatever inevitable climate change we’ve baked into our future.”
That understanding, as well as the realization that water entrepreneurship is lagging behind other sectors focused on climate and sustainability, led Ferguson to found Burnt Island Ventures in 2020. The company invests exclusively in water entrepreneurs building technologies and providing services that are designed to improve water management worldwide. Already, the fund has invested more than $9 million in 12 companies that address such pressing problems as flood tracking, water waste and reuse, and sewer infrastructure and maintenance through both hardware and software solutions.
Ferguson has been in the water sector for more than a decade, including five years as the vice president of programming at Imagine H2O, an accelerator for water startups. In that role, he saw a growing interest in the water sector on the part of founders but not on the part of investors. In 2015, the accelerator had 80 applicants; in 2020, it had 600 across three global programs. “The influx of talent is real,” Ferguson notes. But he saw those companies struggle to find early-stage funding. “It was increasingly frustrating that there was not a seed fund of choice out there for the water sector,” he says.
Ferguson understands why investment in the sector has been slower to develop. “Very few people understand water, because it is an esoteric market,” he explains. Consider the desegregated water sector in the United States: There are about 150,000 separate water and wastewater systems of varying size, the majority of which are extremely small. Those systems—some investor owned, others government operated—have a variety of governance structures and infrastructures that are decades old. This inherent complexity, Ferguson believes, requires a focused investments approach. ”It is a niche market,” he says. “It just happens to be one that is well on the way to being a trillion-dollar industry.”
Ferguson also believes that the industry—everything from water supply to sewerage to water treatment—needs to do a better job of telling its story. “This is an overlooked, giant industry that is at the base of society. Water is essential to our ability to exist,” he says. “[The sector] employs 10 times the number of people who are employed in oil and gas.” Water problems have also become more visible to the American public in recent years, he observes. “When you have people in Park Slope, Brooklyn, walking through water up to their knees, people notice.”
Burnt Island Ventures has a broad vision that is committed to finding and implementing solutions to everyday water concerns around the world. In some countries, that involves providing the means to deliver clean water. That is not just a water problem but also an education problem, Ferguson notes, because a student who is severely dehydrated or afflicted with diarrhea can’t learn effectively. Water also can be an issue of gender equality. In some communities that lack adequate indoor plumbing, women and young girls are expected to transport water for the family each day, a task that can impede attendance at school or employment.
These issues can be addressed with technological advances and increased entrepreneurship in the water sector, Ferguson says. “There is a water crisis going on right now,” he notes, “and there is something that we can do about it.”
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