New York Startup Flowcarbon Aims to Bring More Accessibility and Transparency to Carbon Credit Market Through Blockchain Tech
Carbon credits sound straightforward enough. They’re essentially permits that allow the holding company to emit carbon dioxide or some other greenhouse gas, with the idea that another entity will lower its own emissions. But the market for carbon credits has been plagued by problems ranging from limited accessibility to questions over how much carbon dioxide is actually reduced.
New York-based startup Flowcarbon aims to address those problems through climate technology that brings carbon credits onto the blockchain. Its mission is to bring more transparency and accessibility to the voluntary carbon market (VCM) by driving billions of dollars directly to projects that reduce or remove carbon from the atmosphere.
Flowcarbon created the first open protocol for tokenizing live, certified carbon credits from global projects. Project developers can sell their carbon credits through tokens, which are digital assets stored and traded over the blockchain. The goal is to let them access cheaper funding and scale their projects more quickly.
Despite being formed only a year ago, Flowcarbon has already drawn the notice of deep-pocketed investors who see considerable potential in its technology. On May 24, the company announced that it had raised $70 million in a venture capital funding round and sale of its carbon-backed token.
Funding was led by VC firm a16z crypto and also included General Catalyst, Samsung Next, Invesco Private Capital, 166 2nd, Sam and Ashley Levinson, Kevin Turen, RSE Ventures, and Allegory Labs. Other participants in the token sale included Fifth Wall, Box Group, and the Celo Foundation.
The funding round comes amid surging demand for carbon credits from corporations that use them to offset their carbon emissions. But as Flowcarbon noted in a press release, the ability to scale the volume of credits available has been limited by the VCM’s “opaque and fractured market infrastructure.”
Flowcarbon tackles that issue by letting project developers immediately access a marketplace of buyers on the blockchain. Buyers can then purchase live carbon credits directly from project proponents. The advantage to buyers is greater transparency over their holdings. The carbon credit market is also available to a wider range of buyers – including individuals, small businesses, and crypto investors.
“There are powerful economic incentives to destroy and degrade critical natural landscapes around the world, but the voluntary carbon market is a brilliant financial mechanism that creates a counterbalancing incentive to reforest, revitalize and protect nature,” Flowcarbon Co-Founder and CEO Dana Gibber said in a statement. “We have a big vision, and the stakes are high.”
Investors in the funding round bring considerable expertise to Flowcarbon in web3 blockchain technology and key market categories such as manufacturing, technology, entertainment, and real estate.
Most of the $70 million in funding came from the sale of Flowcarbon’s Goddess Nature Token, backed by a parcel of certified carbon credits from nature-based projects over the last five years. Similar tokens are planned for the future.
“Demand for offsets is rapidly outpacing the speed at which supply can be increased, especially for nature-based projects,” Arianna Simpson, General Partner at a16z crypto, said in a statement. “Tokenization is an obvious solution. We’ve explored the on-chain carbon space extensively and feel confident that Flowcarbon’s team and model are best in breed.”
In addition to Gibber, that team includes fellow Flowcarbon co-founder Caroline Klatt, who serves as Chief Operating Officer.
Gibber is the former Chief Innovation officer at The Stagwell Group. She was also co-founder and COO at Headliner Labs, a SaaS platform for marketers enabling the on-demand creation of AI-powered chatbots for sales. Headliner was acquired by Stagwell in 2020.
Like Gibber, Klatt co-founded Headliner Labs and served as its chief executive.
Under their leadership, Flowcarbon has forged several partnerships, including a collaboration with the Centrifuge protocol that aims to unlock the debt markets for carbon project developers. It also has partnered with the Layer 1 blockchain Celo to provide $10 million of Golem Network Token (GNT) to offset Celo’s emissions. Flowcarbon’s GNT token will launch on Celo.
Other Flowcarbon co-founders are Ilan Stern, Adam Neumann (who founded WeWork), and his wife, Rebekah Neumann.