The New York-based firm closed a $50 million second fund to tackle the increasing water demand from AI data centers and semiconductor manufacturers and back other early-stage freshwater technology and infrastructure companies.
It pulled in nearly 150 limited partners, including global family offices and foundations that had not previously invested in the water sector. “It means that influential people speak water in a way that they didn’t before,” Burnt Island’s Tom Ferguson told ImpactAlpha. “Most of our initial conversations are getting around the usual reasons why people would be skeptical of a fund within water.”
The water technology giant Xylem, a backer of Burnt Island’s first fund, anchored the new round, joined by climate fund-of-funds WovenEarth Ventures. Burnt Island’s first fund, which closed in 2022, raised $30 million and invested in 18 companies, with two exits to date.
Investing in water
Water-related disruptions cost the US economy more than $46 billion each year. Yet global venture investment in water technology totaled just $1.2 billion in 2023, roughly 2% of total climate tech investment.
Burnt Island joins a small but expanding cohort of water-focused investors aiming to fill that gap. Emerald Technology Ventures, for example, has backed nearly 20 water companies, with four exits. It is raising €180 million ($209 million) for its second Global Water Fund, backed by water and food tech company Veralto.
Wastewater treatment provider Hydroleap raised $4.8 million from Antares Ventures, Woh Hup and Singapore Economic Development Board’s venture group to expand in the Asia-Pacific region.
