Sylvera Raises $57 Million Series B Funding: Should Perfect Get In The Way Of Progress In the VCM?

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Sylvera Raises $57 Million Series B Funding: Should Perfect Get In The Way Of Progress In the VCM?

Over 18 months on from Sylvera’s announcement that it had secured $32 million in Series A funding, the carbon data and credit ratings platform has raised $57 million in a Series B round. The funding was led by Balderton Capital and supported by existing investors including Index Ventures, Insight Partners and Salesforce Ventures – alongside new faces Fidelity Strategic Ventures, Bain & Company and 9Yards Capital. After a tumultuous start to 2023, the voluntary carbon market (VCM) was embroiled in ongoing public dialogue about the efficacy, accuracy and reliability of not only the carbon credits being sold, but also the fundamental methodologies supporting them. The significance of Sylvera’s funding should, therefore, not be taken lightly. It is a signal that even in a tougher investment environment for tech, investors are choosing to back a solution that can help to bring much needed validity to what is now being penned the ‘verified carbon market’.

Net zero targets, branding concerns and increasing climate transition risk have converged to create ongoing demand for carbon offsets, as organizations in hard-to-abate sectors seek to utilize offsets in an attempt to neutralize some of their emissions. At present, supply needs to increase by an estimated 40 times to align with corporate climate targets; there is a $1.7 trillion investment gap that needs filling to appropriately address climate mitigation. Despite recent carbon credit investment pledges from Citi and JP Morgan, as well as large forest funds and increasing cases of carbon insetting to help manage and preserve woodland, the opacity and asymmetry of the market are still significant shortcomings that invite criticism.

Sylvera’s goal is to address these issues. It holds an independent position in the market, where it does not act as a marketplace or take payment from project developers, providing much-needed impartiality. It also delivers ratings for different types of offsets depending on the type of solution, such as nature-based or renewable energy. This means that it considers the variability of projects, acknowledging the vastly varied characters from one to the next. The firm also uses high resolution geospatial data that underpins its methodology to assess a given project’s additionality, existence, size and scale. Machine learning techniques can process the data and provide performance forecasts on carbon projects thanks to standardized data sampling. The product therefore seeks to manage uncertainty over the credentials of an offset and its feasibility over its lifetime.

Developments are being drawn up to support accuracy and transparency to tackle the limitations of the VCM. Beyond firms like Sylvera, the Voluntary Carbon Markets Integrity Initiative (VCMII) launched the Claims Code of Practice to instill guidelines on using offsets credibly as part of emission reduction plans, following work from the Integrity Council for the Voluntary Carbon Market (IC-VCM) to bring greater assurance to the VCM and project proponents. Continued pressure from regulators, such as the EU’s Green Claims Directive, will also make it harder to make misleading statements about products’ carbon footprints and the nuance between carbon neutral, climate neutral and net zero. With plenty of market movement in the engineered carbon dioxide removals (CDR) space as well, Verdantix continues to monitor the carbon markets – with more research coming soon.

Guy Lewis

Industry Analyst

Guy is an Industry Analyst in the Verdantix ESG & Sustainability practice. He currently leads research on circular economy software and services and supports research across several other ESG and sustainability themes. Prior to joining Verdantix, Guy was an energy specialist helping to optimize member experience, through which he gained knowledge of both operations and smart technologies. Guy holds a BA in Geography from the University of Manchester, with a placement year at the University of Queensland.