The Future of Water Dinner

In October, we co-hosted a Future of Water Dinner in San Francisco with our partners at First Citizens Bank and Wilson Sonsini Goodrich & Rosati.

The dinner brought together investors from Breakout Ventures, Echo River Capital, Founders Fund, DCVC, Gigascale, Greycroft, and Spero Ventures, alongside founders building new water supply and infrastructure, including our partners Kyle and Kris at AquaPoro and the water stewardship team at Meta.

Starting in 2027, Arizona, California and Nevada will get 1.25 million fewer acre-feet of Colorado River water a year. Arizona alone loses about 30%. Phoenix has already put nearly half a million planned homes on hold because its aquifer can't support them.

The Southwest is just ahead of everyone else. Half the world faces severe water scarcity for part of the year and demand keeps climbing. The AI buildout could add 31 billion cubic meters of annual water demand by 2050. Meanwhile, pipes across the United States leak six billion gallons of treated water every day.

Water is starting to look like energy did a few years ago: a real limit on growth. That constraint is creating interesting areas to build and invest.

We invested in AquaPoro earlier this year with the conviction that the next decade will require creating new water supply, not just using less of it. Building that supply will take people who rarely sit at the same table: founders developing new sources and improving existing systems, companies whose growth depends on water, and the people who finance infrastructure.

What We’re Seeing

A new buyer for water.

Water startups have historically sold to municipal utilities, which are slow and price sensitive. That's changing.

Data centers, chip fabs, and food and beverage manufacturers in dry regions now face permit freezes and rising costs. In Arizona and California, new extraction permits are increasingly difficult, and sometimes impossible, to get; one Phoenix-area bottler planning a $50 million expansion couldn't secure the additional water it needed.

When scarcity stops a growth plan, water becomes an economic problem, and some companies are now looking to produce their own supply.

Corporates are moving upstream.

Some of the largest water users are going further, investing directly in the watersheds they draw from.

Meta has committed to becoming water positive in 2030, restoring 200% of the water it consumes in high-stress regions and 100% in medium-stress regions. It now supports more than 60 restoration projects across 12 watersheds, which restored 1.6 billion gallons in 2024 and are expected to restore over 6 billion gallons a year once fully implemented.

More and more, this work looks like infrastructure. One project uses AI leak detection across 300 kilometers of pipeline in Farmington, New Mexico, saving an estimated 250 million gallons a year. Others modernize irrigation or build dry-cooled data centers that use almost no water for cooling.

Who finances water is changing.

Water companies often need too much capital for early-stage venture funds but are too early for project finance. That may be starting to change as industrial users treat water less as a commodity expense and more as a strategic input to growth. Xylem and Ecolab both describe industrial water as a strategic asset rather than a cost, and EY notes that water availability and cost have become a diligence factor in data center financing.

One question discussed was what this shift could mean for the economics of water technology.

Historically, water technology has always been sold on cost savings. But when water determines whether a fab, data center or factory can be built, new supply can be valued for the industrial capacity it unlocks, not just its cost per gallon. That could move spending from sustainability budgets toward critical infrastructure budgets and shift value toward companies that create new supply, unlock industrial expansion, or own a critical bottleneck technology.

Financing should follow, with structures anchored by industrial buyers, such as long-term offtake contracts.

The Next Opportunity Wave

Water security is a core focus for Cerberus Ventures and we see two ways to close the gap: get more out of the existing infrastructure and unlock new sources of supply at scale.

In November, we'll release a podcast with our portfolio company AquaPoro exploring one of those new sources: pulling water from the air. Check it out.

If you are building or investing in water resilience, we’d love to hear from you.