Water affects everything from how cities operate to how industries keep running, yet most people never see the work that makes all of it possible. That’s the world Tom Ferguson, Managing Partner at Burnt Island Ventures, has spent the last decade studying and investing in. With an MBA from Harvard, an MA from the University of Edinburgh, and years of hands-on experience evaluating thousands of early-stage companies, Tom has become a steady, informed voice in a field that rarely gets the attention it deserves.

Tom’s path into water began when he helped develop the first Carbon Disclosure Project water report, which exposed him to the decisions large companies were making about their water use and the gaps that still existed. He later led a specialist water accelerator, reviewing more than 2,800 startups across everything from industrial wastewater treatment to new membrane technologies. In our conversation, he talks about outdated systems inside utilities, why certain highly publicized solutions rarely hold up in practice, and the unexpected innovations that may have the biggest impact as demand and climate pressure continue to rise.

We also talk about what it looks like to build a company in this space. Tom shares candid thoughts on fundraising, founder decision-making, and the moments when pushing for the next round can actually limit long-term outcomes. He brings real examples, lessons from supporting over a hundred founders, and a very grounded view of what progress in water tech actually requires. It’s a practical, honest discussion that highlights both the promise and the complexity of a sector that quietly supports almost everything around us.

Episode Highlights: 

[05:30] Tom explains how he became involved in water sustainability and early consulting work.

[06:26] Tom describes becoming a water specialist and entering early-stage water innovation.

[07:21] He outlines his training within a specialist water accelerator and how he evaluated companies.

[08:03] Overview of the wide range of startups he assessed across the water sector.

[09:51] The economic realities farmers face and why long sales cycles create barriers.

[11:06] Why water rarely rises to the top of priorities in ag despite its importance.

[12:17] Tom highlights reuse and recycling as critical areas for long-term water resilience.

[13:06] We discuss the infrastructure needs required for large-scale water reuse systems.

[13:22] Desalination innovation and why subsea desal may be transformative.

[14:40] He explains the need for modern software and hardware to reduce costs and improve systems.

[15:55] Tom outlines market limitations, margins, and why hype outpaces fundamentals.

[17:48] Regulation, timing risk, and the dangers of relying on policy shifts.

[19:56] Tom describes regulatory capture, industry lobbying gaps, and ethical tensions in water rights.

[21:27] He explains why water’s physical properties make innovation hard but essential.

[22:13] Why public awareness grows slowly despite worsening climate impacts.

[23:56] Why water tech can be both profitable and socially beneficial for LPs.

[24:37] Discussion about how overwhelming water issues can feel for the public.

[25:17] Tim asks whether Burnt Island Ventures is more of a “picks and shovels” investment model.

[26:57] He explains the challenges of heavy CapEx businesses and why they avoid first-of-kind risk.

[27:36] Tom details why early startups must be cautious with capital intensity and dilution.

[28:08] Founders and the difficult decisions they face while raising capital.

[29:34] He explains how to evaluate whether more capital will help or simply prolong failure.

[30:16] Discussion on liquidation preferences and how large rounds can wipe out founder equity.

[31:52] Tim shares a real-world example of a founder crossing ethical lines to keep a company alive.

[33:07] We acknowledge how quickly situations can spiral without clear communication.

[34:31] Tom discusses passing on companies when storytelling exceeds substance.

[35:14] He explains the red flags of overly polished narratives without real traction behind them.

[36:26] Tom outlines ethical boundaries around bottled water and water rights investing.

[37:29] Conversation covers political risks and eminent domain around community water resources.

[38:18] Tim asks about buzzwords and pitch patterns that concern Tom.

[39:48] Tom shares how he evaluates slide decks, storytelling, and founder communication.

[40:37] He reflects on seeing beautifully articulated pitches that still describe weak businesses.

[41:02] Discussion turns to common bad advice founders receive, especially around aggressive scaling.

[42:33] Tom explains why “fail fast” thinking often harms long-cycle sectors like water.

[43:26] We discuss expectations for average hold time within the fund.

[43:58] Tom breaks down how fund timelines intersect with portfolio maturity.

[44:31] Final thoughts on today’s venture environment and downstream effects on distributions.

Resources & Links Related to this Episode

• Tom Ferguson - Burnt Island Ventures
• Tom Ferguson - LinkedIn
• Carbon Disclosure Project (Water)
• Flocean (Subsea Desalination)
• Spout