Over the last decade, I've been so lucky to learn from seriously good water people, and Debra Coy is one of the best. Over four decades, she has built an extraordinary body of work from public markets analyst to XPV, the preeminent water investing firm that has been extraordinarily supportive to us, to her current independent role advising and sitting on the boards of major water companies. She sits on the investment committee of our Opportunity Fund and it has been such a pleasure to benefit from her insight and wisdom as we have made our first two investments at the Series B. This is a really fun conversation. Everything from the lessons for founders, from earnings transcripts to lending her perspective on the overall history of private markets investing in water. Please enjoy my conversation with Debra Coy.

*Please note in the episode Debra mentions XPV raised a $250m FundI I. The correct amount was a $150m Fund I.

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For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://podcasts.apple.com/us/podcast/the-fundamental-molecule/id1714287205

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Legendary water industry leader, Debra Coy, reflects on the water sector's transformation from obscure investment to a recognized industry. She highlights the impact of increased investor knowledge, rapid digital tech adoption, and a new generation of business-savvy entrepreneurs. Drawing from her experience at XPV Water Partners, Debra emphasizes their focus on strong entrepreneurs and hands-on company building, and champions talent recycling within the sector. She also offers advice to aspiring water entrepreneurs: study public market data, balance ambitious vision with practical execution, and prioritize diverse leadership for enhanced performance.

00:00 Learning from Water Industry Leaders

02:30 - Water's Transformation into an Investable Sector

03:15 - Challenges Across the Capital Stack in Water Investing

04:45 - 14-Year Tech Adoption Cycle in Water

06:45 - The Critical Role of Entrepreneurs in Water Innovation

09:00 - XPV's Focus on Scaling Water Companies

13:20 - Building Synergies with Operational Focus

17:40 - Importance of Talent Recycling in Water Startups

20:00 - Axius’ Growth Strategy with KKR Partnership

22:30 - Managing Water Challenges in the Permian Basin

27:30 - Public Markets as a Guide for Water Entrepreneurs

30:20 - The Value of Reading Earnings Call Transcripts

33:00 - Public Market Sentiment Around Water Investments

35:25 - Key Traits of Successful Water Leaders

37:30 - Advancing Gender and Diversity in Water

40:25 - Balancing Vision and Execution as an Entrepreneur

Links:

Burnt Island Ventures: https://www.burntislandventures.com/

Debra Coy: https://www.linkedin.com/in/debra-g-coy-792992/

SM Material

Key Takeaways:

"Water's finally becoming a real industry."

"The quality of the entrepreneur is critical."

"Digital tech adoption in water has a faster rate. It's shifted the market's openness to innovation."

"The investment world has woken up to water as an investable sector.”

"Public markets give you a constant report card. It's a real-time view of investor sentiment."

"A diverse leadership team is a better leadership team.”

"Think big but do small. Balance vision with execution to succeed."

"Investors are emotional. They want to invest in what they believe in."

"You can't wait for it to get better. You have to do what it takes to make it better."