Denver investment fund raising $5M for water tech startups

Can technology save the Colorado River? A growing number of entrepreneurs and investors think so. To that end, the Denver-based Colorado River Basin Fund is raising $5 million to help promising new water technology companies bring their wares to market.

“We want to nurture startups that need access to money,” said Will Sarni, a general partner in the fund. “That’s where we think we can be part of the solution.”

Worldwide dozens of investment funds target water, through stocks in publicly traded utilities and direct investments in existing technology and infrastructure companies, among others. Just like some mutual funds focus on gold stocks or energy stocks, there are funds that focus on water stocks, such as the Invesco S&P Global Water Index.

But Sarni says that the newly formed Colorado River Basin Fund is the first private investment initiative focused on one place, the Colorado River.

The launch of the new investment fund comes as concern over the Colorado River intensifies. The river is mired in a 20-year drought which has caused its flows to decline by more than 16 percent since 2000, according to the U.S. Geological Survey. Those declines are expected to continue as the climate warms and mountain snow packs shrink.

Lon Johnson, a general partner in the new fund, said it is focused not on profiteering off the sale of water rights, but in finding technical solutions to keep the seven-state Colorado River system viable.

“Often when you think about investment into the West, your mind would go to the exploitive side. How do we profit off this crisis? That is not what this is about,” Johnson said. “What we’re seeking to do is identify the technologies that address scarcity and water quality within the basin. And then help them commercialize and scale.”

Researchers and entrepreneurs are pursuing dozens of technologies that could help the river become more sustainable even as population demands grow and climate change threatens to further reduce flows.

Sarni said the Colorado River Basin Fund will focus largely on satellite and digital technologies that will help farmers use their water more efficiently and help smart homes do the same.

Sarni and Johnson join a growing group of investors and accelerators hoping to speed the creation of new solutions by backing promising startups. Among these is an international initiative called Imagine H20, which has raised more than $500 million to date, according to its website, to help fund new technologies tackling worldwide scarcity and water quality issues.

Closer to home, Denver’s TechStars has partnered with The Nature Conservancy to create a business accelerator for startups focused on sustainability, water and climate change. The Denver Metro Small Business Development Center’s Trout Tank program has a similar mission.

And several young water technology companies are already in the market, including Boss DeFrost, a Denver-based company whose device allows restaurants to dramatically slash the amount of water they use to thaw meat and other foods.

In Montrose there is the Delta Brick and Climate Company, which is dredging reservoirs and using the clay to make bricks. The brick ovens eventually will be fired with methane captured from leaking coal mines. The strategy frees up space in reservoirs, allowing them to store more water. And by removing methane from the atmosphere, the company plans to generate carbon credits that can be sold, generating revenue in addition to that generated from the sale of bricks. Chris Caskey is founder of the three-year-old startup and has won small government grants to fund operations thus far.

He said he’s been frustrated by the traditional investment community, which often requires entrepreneurs to come up with hundreds of thousands of dollars in seed capital before it will formally invest, and which can impose aggressive timelines on products to allow investors to cash out quickly.

But Johnson said he and Sarni have years of experience working in the water sector and that they are aware of the challenges.

“We believe traditional ‘tech’ investors aren’t always a natural fit for water entrepreneurs because those investors may have unrealistic expectations for growth and scale, and then ultimately on the investment return,” Johnson said. “The water sector is fragmented, and growth takes time and skill…our investment strategies and how we intend to work with companies after we invest will reflect this.”

Jerd Smith is editor of Fresh Water News. She can be reached at 720-398-6474, via email at jerd@wateredco.org or @jerd_smith.

Fresh Water News is an independent, nonpartisan news initiative of Water Education Colorado. WEco is funded by multiple donors. Our editorial policy and donor list can be viewed at wateredco.org

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