Patch: Potential Andreessen Horowitz Investment in Carbon Offset API Developer

Early-stage carbon offset API developer Patch is reportedly attracting attention from Andreessen Horowitz as a potential investment. This could represent another strategic move by the venture capital firm into the burgeoning climate tech sector.

Investment Details and Market Position

Sources indicate that Jeff Jordan, a partner at Andreessen Horowitz and former OpenTable CEO, is considering leading the company’s next funding round. Such backing would significantly benefit Patch, leveraging Andreessen Horowitz’s extensive marketing capabilities within an increasingly competitive landscape.

Several companies, including Pachama, Cloverly, Carbon Interface, and Cooler.dev, offer similar API solutions. However, the demand for these services is expected to grow as more businesses seek streamlined methods for achieving carbon neutrality through offsetting initiatives.

Company Overview and Current Traction

Patch was founded by Brennan Spellacy and Aaron Grunfeld, both previously employed at Sonder. The company secured initial funding from VersionOne Ventures in September.

Currently, approximately 15 to 20 companies are utilizing Patch’s services. The platform’s API calculates a company’s carbon emissions footprint by integrating with existing ERP systems, then allocates funds to offset projects designed to remove an equivalent amount of carbon dioxide.

Offset Project Diversity and Technology Focus

While some services prioritize lower-cost solutions like reforestation, Patch offers a wider range of investment opportunities. The company actively encourages clients to consider more advanced, albeit expensive, technologies to help reduce costs and accelerate innovation in the emerging carbon removal space.

Patch, like its competitors, assesses projects based on key criteria: additionality (the extra carbon removed), permanence (the duration of carbon sequestration), and verifiability.

A Complementary Approach to Climate Action

The founders emphasize that their service is not intended as a standalone solution. They advocate for a dual approach – reducing emissions internally and actively removing carbon from the atmosphere.

“We take care of a company’s carbon removal goals, while they focus their efforts on reducing emissions,” the founders stated in a Medium post. “Patch complements this behavioral shift and gives us a real chance to mitigate climate change.”

Defensibility and Marketplace Dynamics

VersionOne’s Angela Tran highlighted the importance of aggregating and digitizing high-quality offset projects. She views Patch as a marketplace where businesses can select projects aligned with their sustainability values, such as forestry or mineralization.

“Businesses care about the type of projects they purchase to neutralize their emissions,” Tran explained. “Patch is partnering with the best carbon removal developers to build a network of impactful projects.”

Andreessen Horowitz’s Broader Sustainability Investments

Patch represents a potential addition to Andreessen Horowitz’s growing portfolio of sustainability-focused investments.

Investments in Food Supply Chain Efficiency

The firm previously led a $9 million investment in Silo, a company developing an enterprise resource planning tool for perishable food supply chains. Silo aims to reduce waste and improve margins, initially focusing on wholesale produce and expanding to other food categories.

Anish Acharya, a general partner at Andreessen Horowitz, stated that Silo is “well-positioned to scale beyond the west coast to help more customers modernize their operations.”

Investing in Resource Discovery for Renewable Technologies

Andreessen Horowitz also backed KoBold Metals in 2019, a software developer utilizing machine learning and big data to identify new sources of precious metals crucial for battery and renewable energy technologies.

KoBold’s digital prospecting engine combines various data sources to improve the efficiency of resource discovery.

A Holistic View of the Renewables Industry

These investments collectively illustrate Andreessen Horowitz’s strategic approach to the renewables industry, leveraging its $16.5 billion in assets under management to support innovation across multiple facets of sustainability.