Australian venture capital firm Tenacious Ventures has made its second investment from its inaugural fund, contributing to a $4 million seed funding round for US-based start-up Nori.
The investment round was led by US VC firm Placeholder and supported by North Island Ventures and others, including an “unnamed agribusiness giant.”
Nori is based in Seattle, Washington and has developed a digital marketplace for carbon sequestration and removal, which uses blockchain technology.
Speaking to Agri Investor, Tenacious Ventures co-founder Matthew Pryor said soil carbon was an area of “very strong interest” for the firm. He noted the investment dovetailed with an announcement from Australian government that lowering the cost of soil carbon measurement would become an investment priority.
“Incentives are a very significant factor in motivating change, so the ability to participate in markets for a range of ecosystem services is a significant factor in creating the right conditions for all kinds of land use transition, including seeing producers get properly recognized for things that are already being done,” he said. The latter could refer to the use of low or zero-till farming that is already practiced widely in Australia, for example.
Tenacious Ventures declined to disclose the size of its commitment to the funding round, but it has been drawn from its first fund, which closed on A$20 million ($14.1 million; €12.1 million) in Q1 2020.
Nori said in a statement that its technology provides a transparent and auditable marketplace for soil carbon offsets, with blockchain helping to eliminate the possibility of double counting of credits. Double counting occurs when buyers of carbon offsets re-sell them to secondary buyers and the total amount of credits purchased increases without decreasing atmospheric CO2.
The investment is Nori’s first outside of Australia, but Pryor said Tenacious hopes to see the firm operating in Australia at some point.
“There’s a wide belief among the shareholders and the incoming investors that Australia represents a really important demonstration market for climate solutions of this kind,” Pryor said.
“The stars aligned around us and what we were doing, and the stage Nori [had reached] with the specific way they have chosen to solve problems that we see as key impediments to progress.”
Coronavirus travel restrictions had not posed a major barrier to making the investment, Pryor said, because Tenacious felt comfortable with the subject area of carbon sequestration and offsets, as well as conducting meetings from remote settings during the pandemic.
Tenacious’ first investment saw it co-lead an A$8 million series A funding round earlier this year for waste management start-up Goterra alongside Grok Ventures, which is also an LP in the Tenacious fund.