Neutral Foods, the first carbon neutral company in the U.S., closed a $12 million series A round on Aug. 31 led by Breakthrough Energy Ventures, which is co-founded by Bill Gates. The Japanese-based Global Brain, Kirin Holdings Company Limited, and Craig Shapiro’s Collaborative Fund participated in the round as well. Celebrity investors such as Mark Cuban, LeBron James, John Legend, and Questlove have also previously put money into Neutral Foods.
The dairy company – which is currently in about 2,000 grocery stores nationally – will use the funding to expand to Whole Foods, Sprouts Farmers Market, Target, and the food service channel. It plans to expand into butter, and then meat.
Agriculture accounts for just over one-third (19%) of all human-made greenhouse gas emissions, right after manufacturing (31%) and electricity (27%).
Established in 2019, Neutral Funds offers milk products that are Carbon Neutral Certified by SCS Global Services. The company follows a three-step process to ensure carbon neutrality. It monitors its products’ offsets, partners with farmers on reduction projects, and buys carbon offsets for the measured emissions from dairy farmers across the United States.
“It’s clear that consumers are hungry for sustainable, climate-forward options and they’re reflecting that in their purchasing decisions, especially when it comes to buying food and beverages,” Carmichael Roberts, part of the investing committee at Bill Gates’ investment fund, Breakthrough Energy Ventures said in an interview for CNBC.
Neutral Foods’ long-term plans include working with farms to bring down their harmful emissions directly. Presently, the company has eight ongoing different projects at farms and 30 projects in the making, Ann Radil, the Head of Carbon Reduction at Neutral Foods, told CNBC.
The projects include changing the cows’ food, separating and composting manure, and changing the way farmers plant to improve the absorption of carbon.
Marcus Lovell Smith, CEO of Neutral Foods, told CNBC the startup both advises farmers on changes to their operations and provides them with financing to implement those changes.
Customer interest in neutral foods shows promise, and the company is looking for opportunities to expand its product portfolio. The startup has begun selling pasture-raised butter and will eventually expand to beef.
Neutral Foods’ commitment to sustainability practices “sends a critical price signal to farmers that climate-forward practices have value,” Roberts told CNBC. “As they continue to improve upon those decarbonization techniques, there’s an opportunity for scale at the farm level that can mirror the brand’s growth and retail expansion.”