A digital platform that links carbon emitters with carbon offsets has attracted some of Canada’s and Silicon Valley’s best-known venture capitalists, underscoring the growing role of tech-style financing in sustainable technology.
Patch, which allows businesses to calculate their greenhouse gas emissions and then offers a variety of corresponding carbon removal projects to purchase, has attracted US$5.7-million in capital from investors led by Jeff Jordan of Menlo Park, Calif.-based VC firm Andreessen Horowitz. Mr. Jordan was previously chief executive officer of Open Table, an online restaurant reservation provider, and sits on the boards of Airbnb Inc. and Pinterest Inc., among others. The firm has backed such companies as Facebook, Lyft and Slack.
The San Francisco-based startup’s other backers are Vancouver’s Version One, which has provided capital to such tech players as Wattpad Corp., Jobber and Clio; as well as Swedish cleantech funder Pale Blue Dot, Chicago-based Valor Equity Partners and Maple VC of Palo Alto, Calif.
Patch is an early-stage example of the rising tide of capital being deployed in cleantech ventures, a trend that has picked up as the pandemic has dragged on, shining a light on many of society’s vulnerabilities. One of those is climate change, and that has led to a boom in financing for cleantech. Patch seeks to capitalize on the growing number of companies that have committed to net-zero carbon emission targets.
So far about 10 companies seeking offsets use the platform. It provides a centralized marketplace for offset options, from traditional ones – such as forestry – as well as various new technologies including, for instance, direct carbon capture. Patch expects another 20 companies to sign on this year, said Patch co-founder Aaron Grunfeld.
“They can browse the network of projects, and build a portfolio of projects that resonate with their brand and meet their budget,” said Mr. Grunfeld, a Montreal native.
The network includes 11 suppliers of offsets, and another 10 are expected by the end of March.
The platform can also link to customers’ own websites through an application interface. That would allow them, for example, to automatically link offsets to corporate travel, taking into account distances and modes of travel to calculate the amount of greenhouse gas that needs to be balanced out. E-commerce companies can also use the platform to provide net-zero options to merchants.
Patch is just one of several companies in the cleantech sector that have attracted funding recently. Since the beginning of the year, Canadian developers of hydrogen fuel cells, renewable energy, and artificial intelligence for the agricultural sector have filed for initial public offerings seeking $100-million each, and more capital-raising deals are expected. Across North America, at least 15 cleantech companies have gone public through special-purpose acquisition corporations since the start of 2020.
The merging of climate-friendly investing and tech-style venture capitalism shows how generational factors are influencing what Silicon Valley is concentrating on, said Brennan Spellacy, Patch’s other co-founder. Millennials and Generation Z – those born after 1996 – are the first two generations that will be affected by climate change in a “serious and material” way unless there are dramatic moves to limit it in the next two decades, he said.
“Because of that, investors and companies observe that kind of behaviour and need to respond to it,” Mr. Spellacy said.
Among the organizations using the Patch platform are European private equity firm EQT; Bus.com, a Montreal-based company that allows groups to book buses online; and Carbonzero of Toronto, which provides ways for governments, individuals and non-profits to measure, manage and reduce their climate impact.
Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. Email him at jeff.jones@globeandmail.com.