Carbon Management Software Vendor Watershed Raises $100 Million In Series C Funding

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Carbon Management Software Vendor Watershed Raises $100 Million In Series C Funding

Recently named a Leader in the Verdantix Green Quadrant: Enterprise Carbon Management Software 2023, Watershed, a US-based firm established in 2019 and specializing in enterprise sustainability platforms, has secured $100 million in Series C funding, bringing its total funding to $239 million. This investment round, led by Greenoaks, and with contributions from Elad Gil, Emerson Collective, Galvanize Climate Solutions, Kleiner Perkins and Sequoia Capital, values Watershed at $1.8 billion. 

The funding follows other venture capital (VC) investments in carbon management software in 2023, such as Plan A's $27 million funding round in September; Persefoni's $55 million Series B funding round in August; and nZero's $16 million Series A funding round in April. Verdantix expects the market for carbon management software to expand to nearly $1.2 billion by 2028. Growth will be driven by mounting pressure from regulators, investors and the public to demonstrate tangible progress on sustainability goals (see Verdantix Market Size And Forecast: Carbon Management Software 2022-2028 (Global)).

The influx of capital into Watershed – and the climate tech sector more broadly – speaks to the urgent need for scalable solutions to the climate crisis. Funding rounds like these are crucial for enabling companies such as Watershed to refine their offerings, expand their reach and, ideally, enhance their effectiveness in helping businesses reduce their environmental impact.

Helping business move beyond Scope 1 and 2: Scope 3, education and engagement
In April 2023 Watershed enhanced its offerings by acquiring VitalMetrics, known for its Comprehensive Environmental Data Archive (CEDA), bolstering its data aggregation and Scope 3 emission capabilities, notably in financed emissions management. The platform integrates publicly available data and facilitates customer engagement through surveys. Watershed is also recognized for its comprehensive abatement practices library, serving as an educational resource across various expertise levels. Plans include a scenario-planning tool and enhanced engagement features for supply chains and business portfolios.

Navigating growth and valuation challenges in the climate tech landscape
Of the many VC-backed start-ups competing in the carbon management space, Watershed is now the most heavily invested and with the highest valuation. Its investors are likely to push for either an IPO or a unicorn-level acquisition (i.e., a multi-billion-dollar price tag). The firm seems to be positioning itself for this by broadening its profile beyond carbon management to ESG and sustainability reporting. However, this puts it in more head-to-head competition with experienced private equity (PE)-backed players and software giants in the ESG and EHS spaces. In the short and medium term, corporate buyers stand to be the greatest beneficiaries of these developments.

Adam Barnard

Principal Analyst

Adam is a Principal Analyst in the Verdantix Net Zero & Climate Risk practise. Prior to joining Verdantix, Adam was a Director at an environmentally focused US investment firm. Adam has previously held roles in London in investment management at Man Group, UBS and Morgan Stanley and in strategy at SABMiller in South Africa. Adam holds a Masters from Yale with a concentration on investment and the environment, a MBA with a concentration on impact investing and sustainability and a BCom(Honors) in Economics and Finance from the University of Cape Town