* Build infrastructure for voluntary carbon markets
* Blockchain technology helps developers get cheaper funding
* $32 million raised in fresh shares, $38 million via token sale
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, said its managing director at Reuters.
The company aims to tap into the growing market for carbon credits that companies buy to offset their greenhouse gas emissions as the world transitions to a low-carbon economy in the fight against climate change.
Despite growing demand, the market has been criticized for being fractured, opaque, difficult to access and with question marks over the quality of some credits.
To help solve this problem, Flowcarbon allows project developers to sell their carbon credits via tokens, digital assets stored and exchanged using blockchain technology, allowing them to access cheaper financing and make move their projects forward faster.
“Our mission is to provide the funding needed to scale projects that reduce or remove carbon from the atmosphere, especially nature-based projects,” said CEO Dana Gibber. Nature-based projects could include those focused on reforestation, nature conservation or restoration.
By tokenizing, developers can access cheaper funding earlier in the life of their project by forward selling their credits, she said.
Buyers, meanwhile, will have greater transparency over their holdings and a wider range of them will be able to participate, including individuals, small businesses, and those in the crypto market.
The company raised $32 million in the funding round led by Silicon Valley financiers Marc Andreessen and Ben Horowitz through their crypto venture firm a16z. 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 past five years. Other tokens of this type are planned with other batches of credits.
Consolidation of credits promotes liquidity and will allow larger volumes to be traded than in a traditional over-the-counter manner, thus dispersing risk. All credits are pre-certified before being tokenized by groups such as Verra, Gold Standard, Climate Action Reserve and the American Carbon Registry.
Paying a 2% tokenization fee through Flowcarbon also saves project developers money from the up to 30% cost of selling their tokens the traditional way, through a levy agreement brokered by a middleman, Gibber said.
The process also allows token holders to unpack and withdraw a carbon credit from the bundle and take physical delivery of it if they wish to sell it off-chain.
“The carbon market is extremely opaque and we believe the demand for offsets is rapidly outpacing the rate at which supply can be increased,” Arianna Simpson, general partner at a16z crypto, said in a statement.
“Tokenization is an obvious solution,” she said, adding that the venture capital firm believes that “Flowcarbon’s team and model are best in class.” (Editing by Tomasz Janowski)