Cnaught Simplifies Carbon Credit Buying for Small Businesses

In 2020, Mark Chen’s 12-year-old son sparked an innovative idea by requesting carbon credits instead of traditional Christmas presents. Inspired, Chen, with his technical background and solar experience, dove into the complex and chaotic carbon credit market. He quickly realized that even knowledgeable consumers struggled to identify high-quality projects and trustworthy rating organizations, highlighting a significant market failure.

Recognizing that many companies with sustainability goals also lacked the resources or expertise to navigate this market, Chen founded Cnaught. The startup’s mission is to simplify carbon credit purchasing for smaller businesses that do not have dedicated sustainability teams, unlike large corporations such as Microsoft or Stripe that dominate current carbon credit markets.

Cnaught operates by sourcing carbon credit projects, vetting them using third-party ratings combined with additional project data, and purchasing high-quality credits in bulk. These credits are held in inventory and sold to customers at a flat rate, with customers able to choose specific project types or a default mix curated by Cnaught, similar to an ETF in retail investing.

This approach addresses a significant gap: while over a million U.S. companies have more than 20 employees, only around 7,000 to 8,000 are listed carbon credit buyers. By lowering barriers to entry and providing an easy 'one-stop shop,' Cnaught aims to expand the carbon credit market and help more businesses contribute to climate change mitigation.

Cnaught has attracted a diverse customer base, from smaller companies like Seattle Chocolate Company to larger firms such as Palantir. The startup recently secured $4.5 million in seed funding led by Bow Capital, with participation from FJ Labs, Karman Ventures, and Silence VC, underscoring investor confidence in its mission to democratize access to carbon credits.

The broader significance of Cnaught’s model lies in its potential to scale climate action by empowering smaller businesses. As sustainability becomes a priority across industries, accessible carbon credit solutions can accelerate corporate responsibility and environmental impact, fostering a more inclusive and effective carbon market.