Paris-based climate tech Greenly, which provides tools for SMBs to track their carbon emissions, has raised a $52m Series B.
The new round, which includes some debt, was led by UK-based investor Fidelity International Strategic Ventures, with participation from US VC Benhamou Global Ventures and French growth equity fund Move Capital. Returning investors included French VC XAnge and US investor Energy Impact Partners.
Banking giant HSBC and IT multinational HPE also participated in the round.
In the crowded sector of carbon accounting startups, Greenly provides a platform that enables SMBs to assess their emissions — a service that is increasingly in demand as regulations kick in across the globe requiring companies to report their environmental impact. In the EU, the Corporate Sustainability Reporting Directive (CSRD), which was introduced last year, makes it mandatory for businesses above a certain size to report on sustainability metrics as of 2024.
But Greenly isn’t the only startup to have spotted an opportunity here. The past few years have seen startups offering carbon accounting tools pop up all over Europe — including France’s Sweep, which raised a $73m Series B in 2022, and Germany’s Plan A, which recently raised a $27m Series A extension.
VCs, meanwhile, are cooling on the sector: in 2022, investors poured $860m into European carbon accounting startups, according to analysis by data provider Net Zero Insights; but in 2023, investment dropped to less than $300m.
The race is on to seize market share — with no clear winner in sight, yet.
Serving SMBs
Greenly mainly serves small and medium businesses, unlike Sweep, which focuses on large-scale, high-emissions companies.
Smaller companies don’t always have a legal obligation to reduce their carbon emissions, but often work with larger organisations in sectors ranging from construction to public services, which are increasingly laying out net-zero targets — and are choosing their suppliers accordingly.
The company says it now has 2,000 customers globally, three times as many as in 2022. With new regulations kicking in, founder Alexis Normand expects these numbers to keep growing.
“The CSRD will enormously boost us,” he says.
Measuring Scope 3
Greenly’s tool lets businesses measure their Scope 3 emissions. Scope 1 covers direct emissions from sources owned by a company; Scope 2 is emissions from electricity, heating or cooling sources they buy; and Scope 3 refers to indirect emissions in their supply chain.
Based on these assessments, the company also offers plans for businesses to reduce their carbon footprint.
That requires a wealth of data, ranging from measuring the emissions of a company’s suppliers to those of its employees commuting to work — and then running detailed analytics on this data to find out how to decarbonise most efficiently.
To increase the precision of its tool, Greenly focuses on specific sectors — tech, finance, industry and retail — where it can provide more detailed insights to customers.
“For example, where tech companies emit most carbon is in cloud usage,” says Normand. “So we’ve built a system that keeps track of consumption data in different geographies and with different cloud providers.”
“With this, we can recommend different times of the day to carry out computations, or different places to store data.”
Internal data collected by Greenly on an initial pool of 100 customers shows reductions of up to 10% in customers’ carbon emissions.
A crowded market
Many carbon accounting startups are choosing to focus on sector verticals to differentiate themselves, given the increasing number of players in the space.
Sweep has started developing tools for the financial services industry, while Deepki, which raised $166m in 2022, focuses on the commercial real estate sector. Others, like Berlin-based Vaayu, are targeting retail customers.
As the market matures, there is also more consolidation. Earlier this week, Sweep announced that it has acquired Consequence, a UK startup that develops AI tools for carbon accounting, to provide AI-powered analytics and recommendations to customers.
To keep attracting new users, Greenly is launching new services, such as life cycle assessments for the devices produced by customers, CSRD compliance for larger companies and training programmes to support SMBs in developing in-house climate expertise.
“SMBs are looking for a one-stop-shop,” says Normand. “This is how we plan to attract and retain them.”
Greenly will recruit up to 70 new employees by the end of 2024, predominantly in marketing and sales, bringing the total workforce to 250.
An acquisition, however, is not on the horizon. “We have no plans to acquire competitors,” says Normand. “It would be coherent to do so but we have enough on our plate already.”
