The Next Big Thing: Water

Blaise Zerega is thirsty: Last week, Jim Labe at Triplepoint Capital laughed that he feels a bit like the character in the The Graduate advising Dustin Hoffman on his future. "Only instead of plastics, water is the future," he told me."And in the next year there are going to be more and more investments in water." He's a prescient guy-- the current issue of BusinessWeek features T.Boone Pickens proclaiming that water will be the 21st century's oil.

Triplepoint is not a typical venture shop. Instead of providing capital in exchange for equity, it makes loans, often with warrants attached. For instance, the firm recently loaned $100 million to Facebook. Other clients have  included the likes of Cisco, Sprint, and YouTube.

That water is the next big thing is a something I've been hearing a lot from VCs lately.The lack of clean drinking water kills some 6,000 people a day, most of them children, according to the World Health Organization. The June issue of Portfolio contains a story about the LifeStraw, an inexpensive device being used to address the problem.
Potable water is a textbook example of an opportunity for technology investors. There's a ready market, ever increasing demand, and plenty room for improvement throughout the entire supply chain.

Labe said he's impressed by companies like Miox, which are entering the water market at the municipal suplplier level by developing more cost-effective and efficient purification processes without the byproducts typically associated with traditional methods. Other venture-backed companies in this category include Pionetics, 212 Resources, and Purfresh.

Labe predicted that the better companies in the companies would go public in 2009-2010, and that he wouldn't be surprised to see 10-20-and even 30 x venture capitals returns "bubbling to the surface, no pun intended." Such Texas-sized predictions would ordinarily give pause, but as the saying goes: Water water everywhere, but not a drop to spare."