Water & Indoor-Air Purification: A Founder’s Path to the Next High-Growth Platform
(By Luke Peters, Apex CEO | luke@apexceo.co)
1. A Founder’s Lesson From China—and the Opportunity It Sparked
When I launched NewAir 20+ years ago, we shipped every cooling appliance from factories across the ocean. That worked—until tariffs, freight spikes, and a pandemic exposed the fragility of a China-centric model.
By 2021, we’d crossed $80M in revenue and sold to PE at a premium. But I walked away with two clear convictions:
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Supply-chain resilience now drives valuation as much as growth.
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Health-focused, ESG-aligned categories with U.S. manufacturing will dominate the next investor wave.
That insight led me to residential water filtration and indoor-air quality (IAQ)—industries with industrial, medical, and consumer demand, plus strong U.S. production.
2. Why Water & IAQ Are Breaking Out Now
| Driver | What’s Happening | Why It Matters |
|---|---|---|
| Regulation | EPA sets first-ever limits on PFAS in drinking water (2024). WELL/ASHRAE credits incentivize IAQ upgrades. | Triggers mandatory retrofits + ESG spend. |
| Health & Climate | Post-COVID air quality + wildfire smoke drive purifier demand. | Converts “nice-to-have” into a budgeted line item. |
| Fragmented Supply Base | Hundreds of <$50M OEMs, no dominant brand. | Classic roll-up math: platform + tuck-ins = multiple expansion. |
| Made-in-America Advantage | Many RO membranes, carbon blocks, HVAC modules made in U.S./Mexico. | Lower tariff exposure + shorter lead times + easier PE diligence. |
Total Market Size: $20B–$30B
Growth: 6–11% CAGR
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Water purification alone: $10B+ by 2033
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IAQ monitoring devices: $18.9B globally by 2034
3. Market Breakdown: Where the Money Flows
| Sub-Segment | 2025 Revenue | CAGR | Margins | Channel |
|---|---|---|---|---|
| Point-of-entry (whole house) | $7B (U.S.) | 4–5% | 55–60% (systems), 70% (filters) | Plumbers, specialty dealers |
| Point-of-use (under-sink, countertop) | $6.9B (U.S.) | 5–6% | 50%+ | DTC, big-box retail |
| Portable air purifiers | $1.8B (global) | 7–8% | 45–50% | Amazon, DTC |
| HVAC IAQ modules | Part of $23B global market | 6–7% | 50–60% | HVAC contractors |
| PFAS remediation | $2.1B (global) | 7% | 40–50% + services | Municipal & industrial |
Recurring Revenue Driver: RO membranes, carbon filters, HEPA—typically 25–40% of revenue once installed.
4. Competitive Map & Deal Activity
| Segment | Mature Incumbents | Challengers | Recent Deals (2024–2025) |
|---|---|---|---|
| Whole-house water | Pentair, AO Smith | SpringWell, Aquasure | Flotilla Partners acquired 4 dealers (7× EBITDA) |
| Under-sink/countertop | Culligan, Brita Pro | Waterdrop, Hydroviv | Culligan acquired Zip Water (IoT RO) |
| Portable air | Coway, Blueair | Levoit, Molekule | AE Industrial invested in Molekule (1.8× rev) |
| HVAC IAQ | Carrier Healthy Home | CarbonReform | Carrier acquired Viessmann (HVAC/IAQ) for €12B |
Takeaway: No brand holds over 7% share in any segment—early innings for disciplined roll-ups.
5. Four Tests for CEOs Considering Entry
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Channel Synergy – Do you already serve HVAC pros, schools, builders, or facility managers?
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Recurring Revenue – Can 20%+ of top-line come from filter subscriptions or service contracts?
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Certification Feasibility – Can you hit NSF/ANSI (water) or UL/WELL (air) standards fast?
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Low-CapEx Supply Chain – Can you assemble/brand using U.S. or Mexico partners?
Score 3 out of 4 = worth a serious diligence sprint.
6. Strategic Playbooks with Illustrative ROI
| Play | Mechanics | Example Target | Value-Creation Levers |
|---|---|---|---|
| DTC Brand Bolt-On | Acquire <$20M Amazon brand; scale via email/SMS + retail. | Waterdrop | +10 pts GM; 25% subscription adoption |
| Route-Based Roll-Up | Acquire water filter service routes; overlay CRM + pricing. | Culligan dealers | 2× EBITDA in 36 months |
| HVAC OEM Integration | Add IAQ module to air-handlers; upsell filters. | Small coil mfg. | +150 bps GM, sticky consumables |
| PFAS Compliance Kit | Bundle RO, monitoring, and service for municipalities. | Niche OEM + lab | 8–10× EBITDA exit potential |
7. PE Risk Factors—and How to De-Risk
| Risk | Why It Matters | How to De-Risk |
|---|---|---|
| Race to bottom pricing | Lowers valuation multiples. | Focus on brand + aftermarket filters + IP. |
| China dependency | Tariff/geopolitical shocks. | Dual-source in Taiwan/Vietnam; assemble in U.S. |
| High CapEx | Hurts IRR. | Use contract manufacturing or light assembly. |
| ESG scrutiny | LPs demand proof. | Package 3rd-party lab results + WELL/LEED docs. |
8. CEO’s 90-Day Action Plan
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Heat-Map Overlap: Flag health-conscious customers (schools, hospitals, HVAC installers).
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Target Shortlist: Find 10 companies <$50M revenue with 50%+ GM and subscriptions.
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Supplier Audit: Quote two U.S. cartridge suppliers and one Mexico partner.
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Financial Model: Build 3-statement model w/ 30% subscription attach rate.
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Reg Review: Analyze PFAS, WELL, and tax incentives (some states cover 30%+ CapEx).
9. Why I’m Investing—and Why You Might Too
I’ve lived the China-import model. I know how fragile it is. What excites me about water and IAQ:
- U.S.-based supply chain
- Health-focused, ESG-aligned demand
- Recurring revenue that Wall Street rewards
The space is wide open for disciplined operators with existing customer reach. If you’re in HVAC, home comfort, plumbing, or health-tech, this playbook can bolt on quickly—and unlock premium multiples.
Let’s Talk Strategy
If you're running a business that overlaps here—or want to co-invest in a platform built for scale—reach out directly.
📧 luke@apexceo.co
