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Start-ups & water: does Silicon Valley have answers to California’s drought ?


Although, year after year, the historic drought ravaging California continues to make headlines, the funds invested in water-management start-ups shrank in 2014. The Governor of California has announced more emergency measures (restrictions, fines, etc.), but the solutions could also come from the technology and the very many innovating start-ups in the region. But so far Silicon Valley commentators have been emphasizing that there are still many factors holding back major financial investment in that field.

In 2014, 12 billion dollars were invested in Internet-related start-ups in Silicon Valley, but only a few hundred million in high-tech start-ups specializing in water management. This finding recently led some English-language media (New York Times, The Guardian) to question Silicon Valley’s apparent lack of interest in resource problems.
The main reason advanced seems to be financial. The return on development investment and the commercial success of an innovative “mobile app” arrive two to three times faster than for an innovation in an industrial sector such as water distribution: the investment cycles for the latter are longer. Investors also say that the price of water is too low – which is the case in California – as justification for their lack of interest.

Credits: ©SUEZ ENVIRONNEMENT / Magnum / Mark Power

Some specialist start-ups, however, do manage to emerge and persuade venture capitalists to take the plunge. A few are developing smart technologies to help farmers – who are responsible for 80% of the water consumption in California – to better manage their irrigation. Still others such as Lagoon, Valor Analytics Water and Fathom, offer data management solutions to help water distribution services and their customers reduce and optimize their water consumption.
While waiting for Silicon Valley developers to become more interested in water, it is currently mainly innovative foreign companies (primarily Israeli and Canadian such as Memtech, Watersmart and Axine) who are setting up in the field.

In the absence of a sufficient number of start-ups engaged in these challenges, some commentators are calling for Silicon Valley giants such as Facebook, Google and Apple to play a driving role in optimizing water management, in the same way that they have committed to “clean energy”.