Blockchain credit trading platform Flowcarbon raises $70 million

LONDON Reuters -- Flowcarbon, a blockchain-enabled carbon credit trading platform backed by WeWork founder Adam Neumann, raised $70 million in its first major funding round, its chief executive told Reuters.

The market has criticised the quality of some credits because of the fractured, opaque, hard to access and question marks on some of the credits, despite increasing demand.

Flowcarbon lets project developers sell their credits through token, digital assets stored and traded using the technology of the digital asset, which allows them to access cheaper funding and scale their projects faster.

Chief Executive Dana Gibber said the mission is to provide the financing necessary to scale projects that reduce or remove carbon from the atmosphere. Nature-based projects could include reforestation, conservation or nature restoration.

She said that by selling forward credits, developers can access cheaper financing earlier in the life of their project.

Individuals, small companies and those in the criptocurrency market can join in, as they will have greater transparency over their holdings.

The firm raised $32 million in the funding round led by Silicon Valley financiers Marc Andreessen and Ben Horowitz through their 16 z venture capital firm. Other investors included Samsung Next and General Catalyst.

The sale of a token called the Goddess Nature Token backed by a parcel of certified carbon credits from nature-based projects has raised the balance. There are more such tokens that are planned to be added to other parcels of credits.

Bundling credits will allow for greater volumes to be traded than in a traditional over-the counter way, thereby dispersing risk. The credits are pre-certifed before being made into token by groups such as Verra, Gold Standard, Climate Action Reserve and the American Carbon Registry.

Gibber said that paying a 2% tokenisation fee through Flowcarbon saves project developers money compared to the 30% cost of selling credits in the traditional way through an offtake agreement negotiated by an intermediary.

The process allows token holders to unwrap and remove a carbon credit from the bundle and take physical delivery if they wish to sell it off-chain.

The carbon market is extremely opaque and we believe demand for offsets is rapidly out of step with the speed at which supply can be increased, Arianna Simpson, general partner at a 16 z coin, said in a statement.

She said that tokenisation is an obvious solution, and that the venture capital firm felt confident that Flowcarbon's team and model are the best in breed.