Climate

Sylvera banks $57M to put carbon offsetting on a path to Net Zero

Comment

Image Credits: Dr. Morley Read (opens in a new window) / Shutterstock (opens in a new window)

London-based climate intelligence startup Sylvera has closed another chunky funding round — bagging $57 million in Series B funding led by Balderton Capital, with participation from existing investors Index Ventures, Insight Partners, Salesforce Ventures, Speedinvest, Seedcamp and LocalGlobe. New investors Fidelity Strategic Ventures, Bain & Company and 9Yards Capital are also joining the round.

The new funding follows a $32 million Series A back in January 2022 and a $5.8 million seed in May 2021 — with Sylvera banking close to $100 million ($96 million+) in total external investment since being founded back in 2020 to plough into plugging the data gap in carbon credit accounting.

The Series B is being put towards expansion into the US market — where it’s opening a New York office and building up a local team to target its services at US financial services companies and the asset management industry. Funding is also being earmarked for further recruitment to feed its engineering and product teams so it can keep driving transparency in carbon trading markets.

Commenting on joining Sylvera’s B round, Erik Mostenicky, principal at Fidelity International Strategic Ventures highlighted its planned focus on asset management use-cases as a particular area of interest. “We are excited to invest in Sylvera and contribute to the next stage of their growth by exploring asset management use cases,” he said in a statement.

“The company’s trusted and unbiased data solves a critical need for asset managers by helping them to better evaluate Net Zero plans of investee companies across the globe. Sylvera‘s unique data platform also enables the creation of new sustainable investment products and educates investors about the quality of carbon offsets. The institutionalization of carbon markets is necessary to help corporates and investors achieve their Net Zero targets and we believe Sylvera will be a key driver in facilitating this.”

Since Sylvera last raised it said it’s grown its customer base seven-fold but it’s still not disclosing customer numbers. Customer names it’s disclosing include the likes of S&P Global, Salesforce, BCG and Mitsubishi.

The UK startup’s mission is to provide trusted data and ratings on carbon offset projects to support customers to meet Net Zero goals by investing in projects with the best credibility for carbon sequestration. Their literal mission statement boils that down to “incentiviz[ing] investment in real climate impact”. (The basic idea for offsetting being companies pay to offset unavoidable emissions by funding stuff that sucks up an equivalent amount of carbon — meaning projects need to properly account for the carbon take up to ensure credits sold live up to the promise of emissions offset.)

One element of this trust flows from Sylvera not being a marketplace that makes money on carbon credit sales itself. It’s not in the business of selling carbon credits directly. Nor does it take payments from carbon project developers to rate their projects. Rather it’s positioning itself as an independent data layer — pitching rigorous analysis and data science to companies that want to meet their Net Zero targets and are looking for robust information on which offsetting projects they should invest in to help them get there, alongside (ideally) their best decarbonization efforts.

While it’s not the only business that offers verification of carbon offset project quality as a service, Sylvera’s pitch is it’s taken the lead in being methodical and rigorous in how it’s gone about gathering data and building models to benchmark projects that are selling carbon credits. Firstly because it’s devised a set of tests geared towards different types of carbon offsetting projects. So it’s not taking a one-sized fits all approach to assessing projects that can be as diverse as so-called “nature-based solutions” (e.g. forest conservation) to clean cookstoves, renewable energy or more emergent stuff like direct-air-capture (DAC) and other carbon removal technologies. (It makes its assessment frameworks available for download on its website.)

It’s also done this test building work in consultation with the market to further avoid any perception of bias — via a series of review committees that include buyers, project developers, investors and so on — reaching a consensus on a standard way to test that’s then “locked” and can’t be changed without undergoing another market review. Which means it can’t be accused of silently moving the assessment goalposts.

When it comes to capturing carbon sequestration data on the ground it’s using a variety of sensing technologies. This can include scanning forest biomass with lidar or using radar to probe soils, for example, depending on project type. But, again, it emphasizes that its approach aims to be methodical in how it samples data to ensure consistent training data underpins the machine learning models it builds — which can then be applied remotely to satellite data to quantify how much carbon is being locked away per project on an ongoing basis so buyers of associated carbon credits can be confident they’re not paying for, er, so much hot air.

Scanning the woods for the trees

“This is the magic of machine learning,” co-founder Dr. Allister Furey tells TechCrunch. “Once you have this calibration data — it’s literally like we’re scanning trees down to, you know, 10 millimetres — that let’s you reconstitute the branching network of single trees and… hundreds or in fact millions of trees in forests where every stage of degradation and regrowth is present.”

“Nobody’s ever — including all the world’s climate scientists — really spent a lot of time and effort really measuring how much carbon is in the world forests,” he goes on to suggest. “And so we’ve done a lot of that work — collaborating with national governments, collaborating with the World Bank, and publishing on that work. So we are the world leaders in getting that calibration and validation data.”

It’s also had to develop a lot of new technologies to be able to interrogate project claims in a way that scales — which means remotely, such as by using machine learning applied to satellite data to analyze what’s happening on the ground in carbon sinks like forests, soils, agricultural systems or mangroves. But, again, Furey voices confidence in its ability to measure and forecast the performance of carbon projects into the future given the foundation of standardized data sampling underpinning its modelling.

“We were the first ones to go very deep and have our own in house set of tests… with a consultative process with a whole market. So what those tests let you do is ingest all the data about all of the projects in a very standard way. They lets you benchmark the projects in a standard way. And then you can start to test whether the claims are accurate — using some independent data,” he says.

“We have the world’s best team there,” he further asserts of Sylvera’s in-house machine learning smarts — before pointing back to the  core of quality data they’re working with. “We don’t just sit in rooms and work on computers. It turns out that to actually make those models work you need to go into those ecosystems and measure them more accurately than they’ve ever been done before. Because it’s basically like anything with AI. It’s never about the algorithms — it’s always about the data.

“Unless you have very, very accurate data, the accuracy of your machine learning will be throttled by the training data set that you’ve got. And it turns out the training data set was complete garbage.”

This focus on accuracy via standardizing data capture and showing the workings around carbon accounting are informed at least in part by Sylvera’s target customers — since it’s selling services to big banks, insurance giants and asset managers who have “expectations of rigour”, as Furey puts it — whereas he says the voluntary carbon market was historically more of a “best effort” type thing.

“Fidelity came into the round as the one of the top three asset managers on the planet,” he notes. “Knowing the transition costs is one thing and then being able to be sure that when you say if you’re going to market an ETF [exchange traded fund] that was a Net Zero ETF product, if you don’t have adequate assurances that it’s Zet Zero the SEC will come and sue you! And rightly so.”

Managing uncertainty, loss and risk

Despite that high expectation bar from clients, uncertainly around carbon offsetting project performance — say if a forest ends up burning down years hence or more trees than expected succumb to disease in a fast heating world, or the fact of a regenerative agriculture project being undertaken in one region leading to increased demand for carbon intensive agricultural processes in another region boosting emissions there — is not something to be afraid of, per Furey.

“There’s this strange obsession with perfection in the climate space that basically stops you doing anything,” he argues, discussing how Sylvera thinks about modelling uncertainty and risk in a changing climate. “We deal with uncertainty all the time — a bond default, or houses sometimes burn down and cars crash or whatever. But that doesn’t mean we don’t have houses or cars or stock markets, right. And so you need mechanisms to account for that loss and get trued up — again with a high level of rigour and integrity.

“So this is totally possible. You can basically observe that the forest is lost and make sure that whoever’s used those credits has to ‘true up’ retrospectively — or the system of issuance does that. So these are completely solvable things and they’re often thrown up as straw men for people that don’t want to spend the money [offsetting their carbon emissions].”

“This idea that normal mechanisms of managing risks somehow [can’t be applied] — because it’s climate, it’s specialist — no, no; this accounting and risk management is fully tractable,” he adds. “Especially once you’ve got the monitoring data and that’s accurate. It’s highly solvable.”

While Sylvera’s faith in robust data sampling and methodical data science is certainly infectious, carbon credits as a tool for addressing climate change do continue to suffer from regular reputation knocks. Such as when projects turn out to have drastically overestimated how much carbon is being sequestered. (An investigation of the Verra carbon standard the Guardian reported on in January found the forest carbon offsets approved by that major project certifier, and used by corporate giants like Disney and Shell, were largely worthless — and could even make global heating worse.)

Enthusiastic uptake of offsetting by high polluting sectors like the air travel industry — or, indeed, oil and gas giants — may also add to the suspicion that too many of these projects still sum to greenwashing (at best).

While poorly conceived projects, such as harmful monoculture tree planting, can demonstrably cause more harm than good — such as by disrupting existing ecosystems or if there’s a high rate of tree failure that risks more carbon being emitted than taken up. So it’s fair to say an off-putting haze of negativity continues to fug up the carbon offsetting space.

Furey argues such credibility and quality issues are all the more reason to rigorously rate carbon offsetting projects — to ensure the highest quality and greatest amount of carbon is indeed being sequestered so that good faith carbon credit buyers inside companies that want to do the right thing and deliver on Net Zero targets will have the confidence to sell the necessary investment (and, most likely, profit write-down) to their board. But he also agrees policymakers are going to need to crank the incentives up.

And while a degree of cynicism vis-a-vis carbon offsetting may still be merited, certainly if it enables companies (or even whole industries) to delay efforts to actually decarbonize their businesses, Furey claims the contrary is true — arguing companies buying carbon credits are decarbonizing faster than those who aren’t. (Albeit Sylvera’s website lists Shell as a customer and the oil and gas giant is not exactly a posterchild on that front — but he declines comment on individual customer cases.)

Engineering carbon removal

He also rightly points out that carbon offsetting can bring other benefits funded through the sale of carbon credits, such as biodiversity (as a result of successful forest conservation) or reduced indoor air pollution (from swapping people to using clean cookstoves). So sucking up as much CO2 as they sell credits for is not the only reason why we should want funds to flow to good quality carbon offsetting projects.

At the same time, some of the projects Sylvera is producing assessment methodologies for are less obviously holistically beneficial — such as biochar for DAC, which is a relatively novel carbon removal technology. So the utility of these sorts of technology-based solutions may be narrower — i.e if their carbon accounting fails to stack up.

On this Furey says the reason it’s assessing a broad church of solutions is that humanity simply doesn’t have the luxury of time vs the scale of carbon sequestering required to reach Net Zero by 2050 to only invest in popular nature-based solutions like tree planting. (If only we’d decarbonized decades ago it could be a far more picturesque picture… )

Simply put, we’ll need to throw everything at drawing truly massive amounts of carbon down — and do that blisteringly fast. (“Net Zero… is the only plan for the world to manage climate change — there’s no alternative plan,” Furey points out. “And the net part of Net Zero basically requires 10 Giga tonnes of carbon sequestration in 25 years — and that’s, like, the most insane amount of stuff to be moved.”)

Albeit, for now, when it comes to tackling (unavoidable) emissions it’s nature-based solutions (not carbon capture moonshots) that are absolutely where the investment action is needed — since they’re, y’know, proven to work. Plus we have — or are getting there, thanks to efforts like Sylvera’s — the data analysis to make the carbon accounting stack up.

“Nature based solutions [are] available now. You can scale them. They’re relatively cost effective. But they can’t get you to 10 Giga tonnes [of CO2 removal] a year in 2050. You kind of run out of the ability to do that. So then you do need to replace it with some engineered solution,” he says, suggesting currently nascent (and/or non-existent) technologies will need to be ready to come on-stream to draw down carbon at scale in around 15-20 years, i.e. when nature-based solutions are likely to be tapped out. Which means there are a bunch of simultaneous investment races that must be won if humanity is to survive climate disaster.

“People are selling those things right now but it’s not needle moving in terms of atmospheric CO2. The forest can do that. And the soils and some ocean stuff can pull the weight for the next 20 years. But you’re gonna run out of the ability to do that and it’s quite terrifying, in the back half of this century, how much CO2 needs to be removed. So you have to have those technologies in place,” he adds. “The norm of transparency and disclosure around all the numbers is yet to be established in those [novel carbon removal technologies], I think it’s fair to say. But it will get there.”

This report was updated with a correction after Sylvera initially sent us incorrect information about its customer growth; we originally reported its claim to have seen 13x growth in its customer base; it subsequently told us the correct figure is seven-fold growth in usage so we have amended our report to make that change. It is not clear how the reporting discrepancy arose. Our original report also included the names of two names of recent Sylvera customers that it later told us it did not have permission to disclose publicly. As a courtesy, we have exchanged those names for other customer names that are public

Isometric taps $25M to build a registry and science platform focused on carbon removal

Sylvera takes $32M to build trust in carbon offsetting ratings

 

More TechCrunch

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

2 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

2 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo