Great Lakes, Greater Innovation: The Midwest’s Water Tech Momentum
At a time when clean water is increasingly becoming a precious resource, Chicago Water Week spotlighted the technologies, strategies, and start-ups shaping the future of sustainable water management. From quantum sensing systems to regional innovation engines, the week’s conversations pointed to one clear reality: water tech is no longer niche, but rather foundational to climate resilience, economic development, and industrial competitiveness.
The Water Challenge is Now a Market Opportunity
Climate change is altering the hydrological cycle, exacerbating droughts, flooding, and water quality degradation. Meanwhile, industries of the future like AI, semiconductors, and quantum computing, are placing unprecedented demand on water systems. Many new data centers are being built in water-stressed regions, often relying on drinking water for cooling. Global water demand is expected to surge by 55% by 2050 (UN) making this dynamic even more urgent.
Yet this crisis is also fueling a new wave of innovation. The urgency is creating tailwinds for start-ups and investors, particularly in areas like wastewater reuse, decentralized treatment, and contaminant detection. Initiatives like Great Lakes ReNEW are actively deploying testbeds, R&D networks, and public-private partnerships to explore scalable solutions.
A Resilient Investment Climate
Despite economic headwinds, venture capital in water tech has shown surprising resilience. Globally, 2022 marked a breakout year, with investments nearly doubling compared to 2020 and 2021. Although growth moderated in 2023 and early 2024, investor interest remains robust, especially in early-stage deals focused on analytics, monitoring, and energy-efficient purification.
Three key investment trends to highlight:
- Decentralized Potable Water Systems: Solutions that offer grid-independent, energy-efficient purification are gaining traction. Innovations in off-grid atmospheric water generation and membrane-free desalination are helping communities and industries reduce dependency on aging infrastructure, e.g., Gradient, Adionics, ZwitterCo and Source.
_ - AI-Powered Sensing and Automation: From predictive failure detection in municipal systems to leak monitoring in commercial buildings, data-driven platforms are transforming how water systems operate. These technologies reduce waste, improve reliability, and provide the operational insight needed for long-term planning, e.g., Pani, Wint, Turing and Leakmited.
_ - Next-Generation Wastewater Solutions: Beyond compliance, there’s a push to extract energy, nutrients, and minerals from wastewater streams. This shift turns what was once a disposal challenge into a resource recovery opportunity, which is especially critical in the face of phosphorus shortages and rising PFAS contamination, e.g., Oxyle and Puraffinity.
The Infrastructure Paradox
Municipal water infrastructure in the U.S. and Europe is aging past its intended lifespan. The dig-and-replace model is proving too slow and expensive, with an estimated $69B funding gap in the U.S. alone. Nearly a third of treated drinking water is lost through leaky pipes, and sewer systems are deteriorating under the strain.
Tools like computer-vision-enabled defect detection, sensor-based optimization platforms, and digital twins are emerging as practical solutions for aging systems. These technologies enable more precise maintenance, reduce compliance costs, and improve service without requiring massive capital overhauls.
Why Chicago and the Great Lakes?
One of the central themes throughout the week was the importance of accelerating innovation through validation and demonstration. For start-ups, landing that first pilot is often the critical inflection point. Risk-averse utilities and industrial players are more willing to adopt new technologies when they see real-world data and peer case studies.
Programs like Great Lakes ReNEW are stepping in to fill this validation gap. With $160M in NSF funding, the initiative is building a network of testbeds ranging from lab-scale membrane testing to full-scale facility pilots and open-water sensors. These environments allow innovators to fine-tune technologies and collect performance data under realistic conditions.
Additionally, a growing accelerator ecosystem is powering commercialization. Gener8tor’s Great Lakes Water Accelerator, backed by NOAA, will support 60 freshwater-focused start-ups with non-dilutive funding. Nomadic Venture Partners is targeting water use in mineral extraction to support pilots in mining, tailings reuse, and resource recovery. Meanwhile, Current and mHUB have launched a new program to help early-stage water technologies bridge the gap from lab to pilot deployment.
The region’s strategic position within the Great Lakes Basin, which holds nearly 20% of the world’s surface freshwater, adds weight to these efforts. But with only about 1% of that water naturally replenished each year, the basin is not immune to long-term stress. Unlike arid regions like Southern California, there’s currently no major push for potable water recycling in the Great Lakes region, but the need for conservation and reuse remains critical, particularly as data center development accelerates.
Redefining Risk: The Role of Insurance and Regulation
Another notable theme was the intersection of water technology with insurance and regulation. With 75% of flood-related damages going uninsured, there’s a growing demand for data platforms that can quantify environmental risks in real time. Emerging players are offering parametric insurance models, where payouts are triggered by objective environmental metrics like rainfall levels, rather than damage assessments.
On the regulatory side, new rules around PFAS and nutrient discharge are creating dual-use opportunities for tech that serves both environmental and industrial compliance needs. This alignment of policy and market incentives is proving to be a potent accelerant for innovation.
Innovators to Watch
With much going on in the regional push to become a global water innovation hub, here are two up-and-coming innovations to watch:
- Dirac Labs: bringing quantum sensing to the water frontier. Originally developed for navigational and earth-mapping applications, its real-time magnetic field sensors are being deployed on buoys and vessels to detect water impurities across the Great Lakes. By combining spatial and time-series mapping, Dirac Lab’s technology identifies contaminants and helps pinpoint their source and timing, offering a powerful tool for protecting freshwater ecosystems.
_ - Gybe: tracking non-point source pollution. Gybe’s platform merges satellite imagery, in-situ water sensors, and machine learning to analyze runoff from agriculture, soil erosion, and deforestation. Customers use Gybe’s system to simulate pollution scenarios, measure outcomes, and make data-backed decisions.
As stakeholders across sectors, from utilities to start-ups to insurers, begin to treat water not just as a resource but as a strategic asset, the water tech market is poised for major breakthroughs.
