Carbon Credits Made Easy

A Novel Approach to Carbon Credit Accessibility

In 2020, Mark Chen received an atypical Christmas request from his son: a desire for carbon credits instead of traditional gifts.

According to Chen’s account to TechCrunch, his son, then twelve years old, conceived the idea independently. Recognizing the potential, Chen began investigating the carbon credit market, quickly discovering its complexities. Despite his background in solar technology and a strong technical skillset, he found the landscape surprisingly chaotic.

Navigating the Challenges of Quality and Impact

Initially, Chen focused on identifying projects that represented genuine quality. He sought to determine which rating organizations performed the most comprehensive evaluations and which initiatives demonstrably contributed to mitigating climate change. However, his efforts yielded limited results.

“Recognizing that even a relatively informed consumer like myself faced these difficulties, it became clear that a broader market inefficiency existed,” Chen explained. He posited that many others likely shared the same struggles.

This issue extends beyond individual consumers, he noted. Numerous companies with established sustainability goals often lack dedicated teams to effectively manage their carbon credit acquisitions.

The Founding of CNaught

In response, Chen established CNaught, a startup designed to simplify the process of purchasing carbon credits for smaller organizations that may lack the resources or time for in-depth market analysis.

Currently, the carbon markets primarily serve large corporations such as Microsoft and Stripe, entities with well-developed sustainability programs and extensive experience in carbon credit procurement and project support. Chen believes the overall market size could be significantly expanded if smaller businesses had easier access.

“Considering there are over a million companies in the United States employing more than 20 people, the number of registered carbon credit buyers – around 7,000 to 8,000 – is remarkably low,” Chen stated.

Investment and Market Focus

Rafi Syed, general partner at Bow Capital, shares this perspective. “My research into carbon and energy transition software revealed that 75% of companies in this space target large buyers like Microsoft, Stripe, and Shopify, largely overlooking the substantial potential within smaller businesses,” he said.

Syed and Bow Capital spearheaded a $4.5 million seed funding round for CNaught, as exclusively reported to TechCrunch. FJ Labs, Karman Ventures, and Silence VC also participated in the investment.

CNaught’s Operational Model

CNaught’s primary function involves identifying projects offering available carbon credits, rigorously vetting them, and acquiring those that meet the company’s quality criteria. The company doesn’t aim to create a new standard, but instead integrates existing third-party ratings with additional project information to assess its value.

Subsequently, CNaught purchases high-quality credits in bulk, maintaining an inventory for customer demand. These credits are then offered to customers at a fixed price, with the company generating revenue from the difference between purchase and sale costs, Chen clarified.

Customers can collaborate with CNaught to specify preferred project types or select a pre-defined mix curated by the company, functioning similarly to an Exchange Traded Fund (ETF) for retail investors.

A Diverse Customer Base

CNaught’s clientele currently spans a range of organizations, from smaller businesses like Seattle Chocolate Company to larger entities such as Palantir.

“Our goal is to provide a streamlined solution, simplifying the process for customers to simply indicate their required quantity,” Chen concluded.