Carbon credits startup announces a major milestone. Flowcarbon – a blockchain-enabled carbon credit trading platform founded by WeWork founder Adam Neumann in 2021, raised $70 million in its first funding round.
Adam Neumann is a businessman and billionaire that has decided to reinvent himself and get into carbon removal after previously being involved in the co-working space and property investment sectors.
Flowcarbon managed to raise $32 million from venture capital firms and $38 million from the sale of its own Goddess Nature Token (GNT) – a crypto token backed by carbon credits on the Celo blockchain.
Participants were 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 include Fifth Wall, Box Group, and the Celo Foundation.
The funding round was led by a16z crypto – a Silicon Valley venture capital fund that is also the biggest investor in the startup.
“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… We are thrilled to be partnering with the most thoughtful investors in the world, who bring a combined expertise in web3 and key market categories…,” said Dana Gibber, CEO of Flowcarbon.
What sets the company apart from other blockchain-based carbon credit platforms is that carbon credit providers pay just a 2% tokenization fee to Flowcarbon to sell their credits on-chain. The fee is lower than what they usually pay for selling these credits through traditional channels, which could be up to 30% of the project value.
Many startups are now leveraging blockchain technology to solve environmental issues, however, it is no secret that carbon credits suffer from big issues related to reliability, validity and trustworthiness of the credits.
They provide the opportunity to companies to keep polluting in the near term, they don’t solve the problem with the environmental damage caused locally, and sometimes it’s hard to keep track of whether the 1 tons of carbon sequestered they equate to actually stays locked permanently.
According to a 2019 ProPublica investigation, carbon credit purchasing actually exacerbated deforestation in Brazil as the industry used offsets as a window to keep polluting.
Flowcarbon solves a problem by making carbon credits more readily exchanged at a lower price but until Adam Neumann and his team officially back an effort to meaningfully decarbonize, the venture is on the radar for taking part in a flawed environmental business model.