Venture capital firms are throwing millions of dollars at the emerging market for carbon credit NFTs in recognition of its status as a potential major new platform for trading environmental credits. Several big VC firms, including Andreessen Horowitz, General Catalyst and Samsung Next, have funded Flowcarbon to the tune of USD 70m.
Flowcarbon is a carbon credit start-up that was co-founded by Adam Neumann – the former CEO of WeWork Inc. – and his wife Rebekah Neumannalong with its CEO Dana Gibber and two others – Caroline Klatt and Ilan Stern. Flowcarbon operates in the voluntary carbon market with Web3, focusing on influencing the blockchain to scale climate change solutions.
Despite part of the financing being sourced from the sale of Flowcarbon’s carbon-backed token, Goddess Nature Token, the amount of capital raised shows that investors strongly believe in the modernization of the carbon credit market.
“The recent financing further validates the industry and the specific utility of minting carbon credits into NFTs on the blockchain,” he said. Ranjeet Sundher, Interim CEO of DeepMarkit. “A deal like this is significant and demonstrates that there is a long list of individuals, venture capitalists and companies like DeepMarkit that believe in using technology and smart contracts to help reduce CO2 emissions and create a better future for our world.”
Andreessen Horowitz’s crypto arm, known as a16z, is a venture capital firm that supports entrepreneurs focused on building the future through technology. It was founded in Silicon Valley in 2009 by Marc Andreessen and Ben Horowitz. General Catalyst Partners, founded in 2000, is a venture capital company that invests and partners with companies that it believes will create a long-lasting and positive impact on the world. Samsung Next, a venture capital and private equity company founded in 2012, invests in bold and ambitious founders while striving to make a difference in the world.
Other investors in the USD 70m deal included Invesco Private Capital, 166 2nd Financial Services, Sam and Ashley Levinson, Kevin Turen, RSE Ventures and Allegory Labs LLC.
Why bring carbon credits on-chain?
Bringing carbon credits on-chain adds major efficiencies to the market, enabling individuals and corporations to internalize the cost of emissions, reducing negative externalities that are currently socialized, and ultimately incentivising more sustainable practices.
The world’s economies are projecting that voluntary carbon markets are one of the best solutions to reduce CO2 emissions. It is also apparent that stakeholders are showing immense interest in carbon market investing, which is expected to only add to the growth of the industry. With substantial interest from around the world and a high expected growth trajectory, the carbon credits NFT sector looks poised for rapid expansion, decentralizing the fight against climate change while working to generate positive returns on investment for shareholders over the long term.
According to Reuters, the value of traded global markets for CO2 permits grew by 164% in 2021. Total value was reported at EUR 851bn by Refinitiv. The European Union’s Emissions Trading System is now valued at USD 769bn. McKinsey estimates that the annual global demand for carbon offsets is due to reach 1.5 to 2.0bn tonnes of CO2 by 2030, and could be as high as 7-13 billion tonnes by 2050.