Our Investment in Evergrow
Unlocking capital for carbon project development
Carbon markets are a key to the world reaching its climate goals — the MIT En-ROADS climate simulator has a carbon price as the main mechanism for a meaningful drop in expected global temperatures. Regulated carbon markets see massively different prices across assets varying from $1-$150/ton CO2e. There is significant uncertainty around the future price of carbon, which has posed financing problems for groups developing new carbon removal projects.
In its 2021 sustainability report, McKinsey highlighted scarce access to project finance as a major impediment to the growth of the carbon credit market:
“When selling those credits, suppliers face unpredictable demand and can seldom fetch economical prices. Overall, the market is characterized by low liquidity, scarce financing, inadequate risk-management services, and limited data availability.”
Because of an antiquated financing ecosystem, carbon developers face a catch-22: They are unable to secure project finance without an offtaker and cannot sell to an offtaker without project finance.
Evergrow, a San Francisco, CA based company, aims to eliminate the project financing barriers faced by developers by serving as their first offtaker of carbon credits. In doing so, Evergrow envisions opening the floodgates for these projects to receive additional funding, thus spurring the growth of carbon abatement activities. We are very excited to announce our investment in Evergrow, co-founded by James Richards and Luke Whiting — proven entrepreneurs committed to addressing climate change. Leveraging successes launching and scaling prior companies, they are driven by a mission to establish Evergrow as the “economic infrastructure for the carbon-neutral economy.”
What is Evergrow?
Evergrow is the world’s first carbon offtake company. Serving as the buyer of regulated carbon commodities (i.e. LCFS credits, RGGIs, compliance offsets) for projects that avoid, reduce, or remove emissions, the company provides projects with the long-term carbon offtake agreements that enable them to secure project finance from traditional banks and institutions. Through these agreements, the company provides price certainty and unlocks capital for these projects vital for addressing climate change. As carbon credits have become an actively traded international commodity, the global market has grown 20% annually, exceeding $272B in 2020. Analysts expect this trend to accelerate, and Evergrow hopes to ensure that the supply of credits adequately scales with increasing demand.
In addition to financing, Evergrow plans to build the largest trove of project-level performance data, the absence of which has challenged institutions like insurers from doing business with carbon projects. As it amasses a portfolio of carbon credits, it will generate revenue by strategically offloading them to carbon buyers and the broader market.
Why Did We Invest?
Compelling Founder-Market Fit
James and Luke, Evergrow’s CEO and President respectively, are both experienced founders and skilled operators. A second-time founder, James created Teleborder, a platform providing legal services for corporations’ foreign employees; the company was sold to TriNet in 2016. Following his time as an executive at TriNet, James went on to start Garuda Ventures, which has invested in 30 early stage technology companies. James is also a personal investor in carbon project developers, and serves on the board of Kanin Energy. Luke previously served as the founding COO of Clearbit, a leading business data and market intelligence company, as well as on the founding team of You.com, an artificial intelligence company. Both founders bring a track record of building talented teams and launching disruptive businesses.
An Opportunity to “Catalyze Carbon Finance”
In our time speaking with carbon project developers and platforms — spanning categories like forestry, methane, soil, direct air capture and others — the critical question of how they will secure project finance inevitably arises. As we’ve observed companies navigate the financing landscape, we’ve come to appreciate this is not an easy process. With Evergrow, we have a strong conviction that it can radically derisk carbon projects so that funding is easier to obtain, more capital is deployed faster, and considerable returns are generated from the maturing carbon market.
Evergrow is working toward a unique opportunity to improve how carbon projects are financed at speeds that are commensurate with the urgency of the climate crisis. Coupled with remarkable founders whose reputation for achievement precedes themselves, Evergrow has us excited for the impact it will have on the transition to a carbon neutral economy.
Additional Resources
If you are an accredited investor and want to learn more about being an investor in our fund (to back more great companies like this one!), reach out here, and include desired quarterly commitment level, accredited investor status, and info on your background and how you could be helpful to the portfolio.