Many major companies have announced net zero emissions targets. And while that alone won’t be enough to move the needle on climate change, these goals have gotten the ball rolling. These net zero targets are also falling, affecting companies throughout the supply chain.
Well capitalized companies can track these carbon emissions throughout their operations using a dedicated team. However, smaller companies may not have the headcount for this. Enter Greenly, a five-year-old Paris-based outfit whose main product is carbon accounting software that pulls in customer data, including utility data, load bills, cloud usage and financial records. It takes this information and, combined with its own data and algorithms, calculates carbon emissions by category and range for customers.
“We’ve built our business on helping these SMBs and mid-market companies address these new obligations at a lower price,” said co-founder and CEO Alexis Normand.
The business of the start-up is growing at a reasonable pace. Greenly last year recorded more than $10 million in annual recurring revenue. Normand hopes to double ARR annually for the next several years.
To help achieve these goals, the company is looking to expand beyond company-wide carbon accounting and into life-cycle assessments for individual products. When performed manually, these assessments can take weeks to months to complete, requiring companies to measure material and energy use alongside that of their suppliers to arrive at a carbon footprint number for a single item. Greenly hopes its highly automated approach will help smaller companies tackle these assessments more quickly and comprehensively by leveraging its expertise in carbon accounting.
“In some industries, it’s increasingly a requirement. Just like in manufacturing, you can’t sell to General Motors or Ford without carbon footprinting every part. In the garment industry and in the manufacturing industry, the same thing happens,” Normand said.
To fund these new initiatives, Greenly recently raised a $52 million Series B round, according to TechCrunch 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 underway before the SEC’s recent rules were approved, and while the then-proposed regulations weren’t the main driver behind the round, it was a “boost.”
The fact that the fundraising is a sizable Series B helps it stand out among climate-tech companies, which tend to face hurdles after the early stages before the growth capital, the so-called lost medium, kicks in.
That’s partly because Greenly isn’t a stereotypical hard-tech climate startup. It entered the round with an advantage: it applies SaaS to climate technology and SaaS a business model that is well understood.
“No one has asked us for different metrics than they would expect from another SaaS company,” Normand said. “Investors weren’t nicer to us because we were air conditioning technology. They looked at things that everyone else looks at, like annual recurring revenue, retention and stability of solution engagement, and so on.”
Greenly’s Series B isn’t necessarily a sign that it’s getting easier for climate tech startups to bridge mid-rounds. However, it does suggest that business investors are favoring climate technology more broadly, proving that there is a market for businesses focused on sustainability. It’s a shift that could end up benefiting the entire industry.
