Many major companies have announced net-zero emissions targets. And while that alone won't be enough to move the climate needle—it will require trillions of dollars in investment, combined with government action—these goals are on track.
Furthermore, these net-zero targets are trickling down, influencing companies across the supply chain, so-called Scope 3 sources, to achieve similar targets.
“If you're in someone's Scope 3 and this company is making some tough promises, they're going to put pressure on you,” said Greenly co-founder and CEO. (CEO) Alexis Normand told TechCrunch. “For many midmarket and small businesses, not being able to participate in that larger company's reduction strategy effectively locks them out of procurement.”
For well-capitalized companies, tracking carbon emissions across business activities often involves a dedicated team. However, smaller companies may not have that much headcount. These are the companies Greenly is targeting. “We've built our business on helping small and medium-sized businesses meet these new obligations affordably,” Normand said.
Greenly's flagship product is carbon accounting software that ingests customer data such as utility data, freight bills, cloud computing usage, and financial records. We take that information and combine it with our proprietary data and algorithms to calculate carbon emissions by category and range for our customers.
The startup's business is growing steadily. Greenly is a Paris-based company founded in 2019 and last year hit his $10 million-plus annual recurring revenue mark. Normand hopes to double ARR annually over the next few years.
To help achieve these goals, the company aims to expand beyond corporate-level carbon accounting to individual product lifecycle assessments. If these assessments are done manually, they can take weeks or months to complete, and companies can compare their material and energy usage to suppliers to arrive at a single-item carbon footprint figure. It is necessary to aggregate it together with the amount used. Greenly hopes that its automation-focused approach will help small businesses tackle these assessments more quickly and comprehensively by leveraging its carbon accounting expertise.
“Some industries are increasingly demanding that. Just like in manufacturing, you can't sell to General Motors or Ford without disclosing the carbon footprint of every spare part. Apparel. It's becoming the same thing in industry and in construction,” Normand said.
To fund these new initiatives, Greenly recently raised $52 million in Series B, TechCrunch has learned exclusively. The round was led by Fidelity International Strategic Ventures with participation from Benhamou Global Ventures, Energy Impact Partners, Hewlett Packard Enterprise, HSBC, Move Capital, and XAnge. The company's fundraising was well underway before the recent SEC rules were approved, and while the then-proposed rules were not the primary driver of the fundraising, they were a “boost.”
The fact that the latest funding is a hefty Series B makes the company stand out among climate technology companies, which tend to run into early-stage, so-called “missing middle” hurdles before growth stocks step in. Contributing.
Part of that is because Greenly isn't your typical hard-tech climate change startup. The company applies SaaS to climate change technology, and came into the round with the advantage that SaaS is a well-understood business model.
“No one asked us for different metrics that they would expect from other SaaS companies,” Normand says. “Investors were not kind to us because we were climate change engineers. I paid attention to what everyone else was paying attention to.”
Greenly's Series B isn't necessarily a sign that it's getting easier for climate tech startups to make the transition to intermediate rounds. But it does suggest that venture investors are starting to take an interest in climate technology more broadly, proving that there is a market for sustainability-focused companies. This is a change that could ultimately benefit the entire sector.