Neumann-backed climate tech venture Flowcarbon raises $70 mln

Verra Mobility

24/05/2022 11:30

* Building infrastructure for voluntary carbon markets
    * Blockchain tech helps developers get cheaper financing
    * $32 mln raised in fresh equity, $38 mln through token sale

    By Simon Jessop
    LONDON, May 24 (Reuters) - Flowcarbon, a blockchain-enabled
carbon credit trading platform backed by WeWork founder Adam
Neumann, has raised $70 million in its first major funding
round, its chief executive told Reuters.
    The company aims to tap into the growing market for carbon
credits companies buy to offset their greenhouse gas emissions
as the world transitions to a low-carbon economy in the fight
against climate change.
    Despite increasing demand, the market has drawn criticism
for being fractured, opaque, hard to access and with question
marks over the quality of some credits.
    To help fix this, Flowcarbon lets project developers sell
their carbon credits through tokens, digital assets stored and
traded using blockchain technology, allowing them to access
cheaper funding and scale their projects more quickly. 
    "Our mission is to provide the financing necessary to scale
projects that reduce or remove carbon from the atmosphere, in
particular nature-based projects," said Chief Executive Dana
Gibber. Nature-based projects could include those focused on
reforestation, conservation or nature restoration.
    By "tokenising", developers can access cheaper financing
earlier in the life of their project by selling forward their
credits, she said.
    Buyers, meanwhile, will have greater transparency over their
holdings and a broader range of them can join in, including
individuals, smaller companies and those in the crypto market. 
    The firm raised $32 million in the funding round led by
Silicon Valley financiers Marc Andreessen and Ben Horowitz
through their a16z crypto venture capital firm. Other investors
included General Catalyst and Samsung Next. 
    The balance was raised through the sale of a token - the
Goddess Nature Token - backed by a parcel of certified carbon
credits from nature-based projects over the last five years.
More such tokens are planned with other parcels of credits.
    Bundling credits helps liquidity and will allow for greater
volumes to be traded than in a traditional over-the-counter way,
thereby dispersing risk. All credits are pre-certifed before
being made into tokens by groups including Verra, Gold Standard,
Climate Action Reserve and the American Carbon Registry.
    Paying a 2% tokenisation fee through Flowcarbon also saves
project developers money compared with the up to 30% cost of
selling their credits in the traditional manner, through an
offtake agreement negotiated by an intermediary, Gibber said.
    The process also allows token holders to unwrap and remove a
carbon credit from the bundle and take physical delivery should
they wish to sell it off-chain.
    "The carbon market is extremely opaque and we believe demand
for offsets is rapidly outpacing the speed at which supply can
be increased,” Arianna Simpson, general partner at a16z crypto,
said in a statement.
    "Tokenisation is an obvious solution," she said, adding the
venture capital firm felt confident "Flowcarbon’s team and model
are best in breed."

 (Editing by Tomasz Janowski)
 ((simon.jessop@thomsonreuters.com; +44 (0) 207 542 5052;
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