Last night I listened to a great podcast episode. Or, better said: I watched a great show on TV last night.
Quick note: yeah, from now on, I’ve decided I’ll publish whenever I find something extraordinary, so you’ll get a few surprises from time to time.
My colleague Ravi Kurani sat down with Tom Ferguson, managing partner at Burnt Island Ventures (BIV), one of the few venture firms that has spent years looking at water full-time.
I enjoyed it very much, and a few points stuck with me strongly enough that I wanted to write them down before the week swallowed them.
Why is water igniting now?
What is the S-curve, and where are we on it?
What does it mean to say water is inevitable?
And how is AI reshaping the sector?
On why water is igniting now
Ravi asked water is a $1.6 trillion industry, humans have managed it for millennia, so why does it suddenly feel like the sector is catching fire?
Tom’s first answer was: “I don’t know, I really don’t know.”
I loved that.
It is rare to hear an investor admit uncertainty on the one question everyone expects them to have nailed.
But he then laid out a hypothesis built on five forces converging at roughly the same time.
The first is a shift in how talent thinks about careers. More capable professionals are moving up Maslow’s hierarchy and deliberately choosing work that does measurable good, rather than defaulting to the standard corporate track.
The second is climate change breaking the engineering bounds. Around 2020, droughts and floods pushed water availability outside the historical ranges our infrastructure was designed for.
The third is high-visibility crises. Flint in 2014 and the California drought in 2016 put water on front pages, and Tom noted that these moments directly pushed individual founders to start water companies.
The fourth is infrastructure reaching its 40-year end of life. Major public capital spending on U.S. water systems dropped sharply after the late 1970s. Assets built with typical 40-year design lives started failing around 2020, and someone has to replace them.
What I take from this is that no single factor explains the moment; the convergence does.
The ignition is global, but the spark is local.
On the S-curve
Tom used the S-curve to describe where water sits today. In venture and market development, it traces how a technology, or an entire category, moves from obscurity to broad adoption. It has three periods.
The activation period is when the raw ingredients come together: entrepreneurial talent, foundational data, early proof points, and initial capital, until they reach critical mass.
The growth period is the steep part of the curve. Awareness ignites, the light bulbs come on, and capital and talent start recycling back into the space as people realise the category is commercially real.
The acceptance period is maturity, where activity flattens onto a higher plateau once adoption is widespread.
Tom’s read is that the last several years were water’s activation period, a phase spent assembling specialised data, technology rails, and strong founding teams.
Now, he argues, the sector is crossing the inflection point into growth.
What I am more confident about is which ingredient was scarcest during activation. It was not capital. It was people who understand both the technology and the messy reality of how water systems are procured, built, and operated.
That is the knowledge gap I keep coming back to on The Water MBA, and I suspect it will determine how steep the growth phase actually gets.
On the inevitability of water
The phrase that stayed with me most was the idea that water’s modernisation is not a hype cycle but an inevitable, long-term trajectory spanning 10 to 30 years.
A $1.6 trillion market growing at 5–8% a year simply cannot be rebuilt overnight.
Tom framed it as two massive tasks happening at once.
The developed world has to replace infrastructure that has reached the end of its useful life, while much of the world still needs primary infrastructure, with the figures cited in the conversation being around 2.5 billion people without sanitation and 750 million without clean drinking water.
Layer accelerating climate events on top, and water stops being a static asset class and becomes an ongoing operational priority.
For capital, this means resilience.
For talent, it means purpose and scope. Tom stressed that execution, not ideas, is the real bottleneck, so there is growing demand for skilled in both startups and incumbents trying to modernise their software, sensing, and hardware.
On AI
Tom described AI’s influence on water across five areas, and they fit together better than I expected.
AI puts a target on traditional hardware, software, and consulting models. Work that once required expensive consultants or manual effort, such as reviewing and labelling sewer inspection footage, is increasingly automated.
At the same time, instrumentation is finally creating data lakes. Water has always been under-instrumented, but sensors, IoT devices, earth observation, and satellite communications are generating the inputs AI needs to be useful.
The physical buildout of AI is itself a water story. Semiconductor fabs, power plants, and data centres are major drivers of industrial water treatment demand and investment.
This changes how investors think about moats. If a software lead can be replicated quickly with AI, then defensibility has to come from somewhere else.
Tom highlighted two sources: owning the data at its point of creation, through the hardware and sensors, so you can’t be disintermediated; and navigating real-world complexity, meaning long utility procurement cycles, physically difficult engineering, high switching costs, and trust.
What I’m taking with me
If I compress the episode into one thought, it is this: water is igniting because several slow-moving pressures finally converged, the sector is crossing from activation into growth, and AI is rewarding exactly the things that are hardest to do in the physical world.
I highly recommend listening to the full conversation. Thank you to Ravi and Tom for an hour well spent.
Now over to you: which of Tom’s five forces do you see most clearly in your own market? And is your corner of the water sector still in activation, or has the curve already started to bend upward? Let me know in the comments. I read every on