Water is the silent engine of the global economy and one of its most threatened resources. Nearly every U.S. state faces chronic water stress. Infrastructure is crumbling, floods and droughts are escalating, and the economic cost of water-related disruptions now exceeds $46 billion annually. And yet, venture capital remains drastically under-deployed: water tech drew only $1.2 billion in global VC funding in 2023, a fraction of climate tech’s total.
The gap between infrastructure needs and funding (forecasted to reach $194 billion annually by 2030 in the U.S. alone) presents a massive investment opportunity. Water touches every part of the environmental and industrial stack: data centers, hydrogen, agriculture, energy, manufacturing, public health, to name a few. But success requires more than capital. It requires hardware-ready platforms, deep technical expertise, and a portfolio strategy aligned with how infrastructure operates in the real world.
mHUB Ventures invests in pre-seed and seed-stage startups building breakthrough hardtech solutions changing the landscape of foundational industries. The firm is the most active investor in Chicagoland for sustainability focused startups, having invested in over 20 energy tech and sustainable manufacturing solutions since 2021 and in concert with the needs of large industry players such as Avnet, Nicor Gas, Constellation, Invenergy, Baxter, Marmon, and more.
Within its smart and sustainable investment thesis, mHUB Ventures is taking a particular look at water tech solutions and has identified seven hard-tech domains with the potential to redefine how water is sourced, used, and reused. Each rooted in commercial viability, macro-level urgency, and startup activity.
As AI drives unprecedented growth in global data infrastructure, water has become both a constraint and an opportunity. Traditional evaporative cooling consumes millions of gallons daily, often in arid regions, while sacrificing efficiency and capacity. This is pushing the industry toward liquid and immersion cooling, as well as water-based thermal storage. mHUB is well-positioned to support startups developing immersion tanks, dielectric fluids, and modular heat exchange systems that require lab testing and real-world integration. The most compelling innovations will offer drop-in enhancements to existing infrastructure, avoiding the need for wholesale system overhauls. As data centers seek to become water-positive and the energy grid looks to flexible storage, mHUB is ready to support companies delivering field-ready, IP-rich systems at the intersection of water, compute, and energy.
A data center’s environmental footprint is highly contingent on where it is located. The (A) water intensity (m3 MWh−1), (B) water scarcity intensity (m3 US-eq MWh−1), and (C) GHG emissions intensity (tons CO2-eq MWh−1) of a hypothetical 1 MW data center placed in each of the 2110 subbasins of the continental United States. Source: Environmental Research Letters, “The environmental footprint of data centers in the United States.”
Green hydrogen is scaling fast as a decarbonization tool, especially for hard-to-electrify sectors, but water remains a key constraint. Producing one kilogram of hydrogen requires about 9 liters of ultrapure water, often in areas with only brackish or reclaimed supplies. This creates strong demand for compact, reliable water purification systems. mHUB Ventures is interested in solutions that combine advanced materials with system-level engineering—membranes, deionization modules, and integrated controls. These companies benefit from fluidics prototyping and electrochemical testing. As electrolyzer deployment grows, clean water access will become a determining factor in project feasibility. Founders who prioritize durability, resistance to fouling, and compatibility with existing electrolyzer systems will lead in this critical phase of the energy transition.
1SE = Slow Evolution; ST = Sustainable Transformation. ²MEPC80 Sensitivity includes the implications of the 2023 adoption of IMO Greenhouse Gas Strategy. 3Refining is the only sector where demand in 2035 and 2050 in the ST scenario is lower than in the SE scenario. Includes conventional fuels refining and biofuels hydrogenation and refining. 4Aviation and maritime include the direct use of hydrogen and hydrogen-derived synfuels including kerosene, diesel, methanol, gasoline, and ammonia. The category also includes some hydrogen-derived synfuels in road transport. Maritime in Sustainable Transformation includes MEPC72. 5Includes hydrogen demand for heating in other industry and buildings. Source: McKinsey, Global Energy Perspective 2024.
Concerns over contaminants like PFAS, heavy metals, and solvents are driving demand for filtration systems that go beyond the limitations of traditional methods. Technologies such as activated carbon and reverse osmosis are often inefficient, wasteful, or ineffective at trace levels. This opens the door for startups working on next-generation membranes, electrochemical destruction, and advanced adsorbents. mHUB Ventures can incubate high-performance or hard-to-treat use cases, especially those requiring early prototyping and simulation. The filtration space is technically intensive and shaped by evolving regulations, making performance validation and design-for-certification key success factors. As decentralized treatment gains traction, this category presents a scalable, high-impact entry point into industrial and municipal markets alike.
With water scarcity growing and disposal costs rising, industrial operators are turning to technologies that recover every usable drop. ZLD systems and valorization platforms reduce environmental risk while extracting value from waste streams such as minerals, heat, or nutrients. Engineering efficient, compact systems that blend evaporation, crystallization, filtration, or biological processes demand integration across mechanical, thermal, and fluid systems—areas where mHUB Ventures can provide meaningful support. This theme is particularly promising due to its circular economy potential and relevance across sectors like manufacturing, food processing, and mining. Teams that can optimize energy use and performance through smart system design are well placed to turn wastewater from a cost center into an asset.
The Circular Potential of Every Drop. Source: Water Reuse Europe, “Water in the circular economy”
Aging infrastructure and limited monitoring capabilities contribute to massive water loss and increased risk. Emerging IoT and sensing technologies are making real-time monitoring of flow, pressure, and contamination more accessible. These tools are critical for utilities, manufacturers, and even households to detect leaks, prevent failures, and comply with new mandates. Low-power sensors, SCADA-compatible devices, and edge-enabled analytics should be designed to integrate easily with existing infrastructure. Success here hinges on embedded hardware design, wireless connectivity, and environmental validation - core capabilities within the mHUB Ventures toolset. As public and private stakeholders invest in modernizing water networks, companies that offer reliable, easy-to-deploy intelligence systems will have a significant edge in this rapidly expanding market.
Agriculture is the world’s largest water consumer, but much of that use is inefficient. Precision sensing and environmental monitoring offer a way to optimize irrigation, reduce input waste, and improve yields across both traditional and controlled farming systems. Startups are building sensor networks, telemetry platforms, and automated control systems designed for soil, crop, and aquaculture environments. mHUB is interested in ventures working on rugged, low-power devices suited to field conditions, with strong capabilities in power management, enclosures, and wireless data transmission. As climate volatility and water stress increase, tools that provide farmers with real-time visibility and automation will become essential. Companies that pair agronomic insight with robust hardware and interoperability will be well positioned to lead in this high-need, high-impact space.
Integration of AI, IoT, and robotics in a smart farm. Source: Land-Grant Press, “Empowering Precision Agriculture with the Internet of Things, Artificial Intelligence, and Robotics.”
In areas lacking reliable water infrastructure, decentralized generation is quickly becoming essential. Technologies such as atmospheric water harvesting and compact desalination units are enabling clean water access in off-grid, disaster relief, and remote applications. These solutions require rugged, energy-efficient design and the ability to perform under varied environmental and power conditions. Investors should prioritize startups developing membrane-based systems, humidity harvesters, and solar-thermal modules. Success in this space requires expertise in materials, thermal systems, and field-ready packaging, all of which align with capabilities in the mHUB Ventures network. As climate disruption increases the urgency for resilience, off-grid water technologies offer a path to scalable, life-supporting infrastructure that can operate without centralized systems.
How Atmospheric Water Generators Pull Drinking Water from Air. Source: Rivil
Beyond core water infrastructure, emerging applications in consumer systems, infrastructure resilience, and decentralized energy integration offer additional paths for innovation. Circular technologies reduce plastic waste and redefine water access in commercial and public environments. Infrastructure modernization in manufacturing presents opportunities to improve uptime, safety, and resilience across water dependent operations. Meanwhile, emerging technology at the intersection of water and renewable energy are enabling new models for off-grid resilience and distributed infrastructure.
Across these areas of opportunity, mHUB Ventures seeks to combine fast-to-market solutions like point-of-use filtration or IoT leak detection with deeper-tech plays in electrolysis or off-grid desalination. Creating a high-performing water tech portfolio needs both breadth and operational depth, reflecting where capital is scarce, but demand is rising and where infrastructure gaps offer clear insertion points.
Here is the initial guidance that mHUB Ventures uses to pick opportunities in water tech.
Just as important as knowing where to invest is knowing what to avoid. The water sector is littered with promising technologies that failed to scale because they lacked practical application paths. Common red flags include:
Water is one of the most important but undercapitalized sectors in sustainable and infrastructure innovation. Building a high-conviction portfolio here is not just an exercise in thematic alignment; it’s a discipline of choosing companies that can move from concept to deployment, from promise to performance. The best portfolios pair vision with practicality, bold bets with grounded execution. They reflect the complexity of the water challenge and the ingenuity of the teams working to solve it.
Water technology stands at a rare intersection of urgency and opportunity. The technical problems are known. The commercial demand is rising. Solutions exist; they just need the right conditions to scale.
Investing here means engaging with real constraints: how systems are built, how infrastructure gets upgraded, and how risk is managed on the ground. It’s not abstract. It’s hands-on, operational, and often unglamorous work that happens at the edge of climate, industry, and public health.
This is where durable value is being created. Not through volume, but through precision. Not by following narratives, but by understanding systems. The firms that lean into this with discipline (i.e., technically informed, field-aware, and patient) will be building the backbone of the next generation of water infrastructure.
Learn more about mHUB Ventures at mhubchicago.com/hardtech-venture-capital
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