As a serial entrepreneur, Diego Saez Gil is used to presenting ambitious start-up ideas and getting rejected. So he was prepared for some rejection with his latest venture, Pachama, a developer of satellite data-enabled technology for monitoring CO2 offset replanting projects.
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But he doesn’t hear “no” much, so far. His first pitch, to Y Combinator, given some idea-phase funding. Since then, a long list of prominent investors have signed on to back the 3-year venture, including Bill Gates-Based Pioneering Energy Ventures, Amazon.com, and Chris Sacca‘s Lower carbon capital.
Now, with over $ 24 million in Pachama’s coffers, its founder is preparing to scale a mission inspired by a journey back to his native South America, where he saw the ravages of deforestation on his own.
“Every government, business and consumer should have the opportunity to contribute back,” Saez Gil said. “The idea is that if you want to, you need to be able to invest with confidence and with confidence in projects that plant trees, preserve forests.”
Although Pachama appears to be the highest recent funding recipient in the climate software area, it is far from the only start-up that is drawing increased interest from investors. As more companies and governments declare commitments to reduce CO2 footprints, there is a huge demand for startups that offer tools to fulfill these promises.
When looking at financing data at an early stage for the last few months, it is clear climate and carbon tracking software has a moment.
At least 20 startups that do something at the intersection between decarbonization and software for measuring progress have provided funding in pretty much the past year per year. Crunchbase data. Offers are overwhelming seeds and early stages, indicating that investors see potential for sharp growth – and much higher valuations – ahead.
Below we look at some of the recipients of the funding:
It’s easy to see why carbon tracking and decarbonisation software is appealing, as climate scientists point to a future of accelerated warming and potentially catastrophic impacts on countless ecosystems if emissions go unchecked.
The question with a less obvious answer is: Why now? We have known about climate change and the issue of reducing CO2 footprints for decades. What are the reasons for an outbreak of early activity in space right now?
This is a question that is often asked Andrew Beebe, CEO of Clear Ventures. He says the current investment environment compares favorably with “Cleantech 1.0”, the mid-term period in which early climate start-up investments peaked and crashed.
This time, entrepreneurial caliber is much better, according to Beebe. He also sees companies taking on carbon accounting at CFO and board level, with demand for more sophisticated tools to help track and reduce emissions.
“We can’t handle what we can’t measure,” Beebe said. “And when you measure … Then you ask the question: What do I do now?”
Carbon meets software
Newly funded startups offer a range of options for what devices can do with their CO2 footprint.
- ClimateView, a Stockholm-based startup that closed on a $ 10 million Series A series in September, offers cities tools to manage their planning as they transition to low- or zero-carbon economies. It is a hugely addressable market as the company estimates that cities account for 70 percent of the world’s global emissions.
- Persephone, an Arizona-based provider of software for conducting carbon accounting and preparing sustainability information, has raised well over $ 13 million. Such tools are in demand due to environmental conscientiousness as well as economic considerations, as more institutional investors are adding sustainability requirements to companies they support.
- SINAI Technologies, a San Francisco SaaS startup working with companies to measure and reduce their CO2 footprint, closed for $ 10 million in an overt Ventures-led round this summer. Manager Maria Fujihara said the company fills a niche with high demand as more companies enter into net-zero commitments but have not yet hammered out a strategy for how to meet them.
“It’s a bit of a new category we’re creating: Decarbonization as a service,” Fujihara said. Its rollout comes as internal CO2 prices in companies are becoming the norm, with companies wanting to meet investors’ environmental standards, offset climate risks and prepare for future CO2 taxes.
It’s a scalability
A prominent feature of the latest crop of climate-tracking startups is that they are a SaaS-heavy cohort with a lot of technical credentials among founding teams and investors.
Several of the largest new climate-focused funds, including Breakthroughs, LowerCarbon and the Amazon Climate Pledge Fund, were launched by investors better known for their technical prowess than environmental recognition.
The same is often true of founders. Pachama’s Saez Gil, for example, has a resume that reads like a tech startup guy. Previously, he founded Bluesmart, and a Y Combinator-backed smart boot boot. Before that, he launched WeHostels, a mobile travel booking app aimed at young travelers.
It makes sense at this point to see more technicians move in decarbonization, Saez Gil said, noting that: “What Silicon Valley has figured out is how to use technology as a leverage to scale very quickly.”
For venture-based technology companies, we are used to seeing scalability translate into massive valuations and platforms going from garage startup to global powerhouse in a few short years. In the climate software area, the hope is not only to grow large companies, but also to have a significant impact on building the infrastructure for a lower CO2 future.
Illustration: Dom Guzman
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