Information on the Target

NCX is a pioneering carbon marketplace that focuses on facilitating high-quality carbon credits, leveraging advanced technologies such as remote sensing and artificial intelligence to create an impactful solution for climate action. Formerly known as SilviaTerra, NCX was co-founded by forester Zack Parisa and computer scientist Max Nova, who utilized data from Microsoft's AI for Earth program to develop the most precise map of forested areas in the contiguous United States. This foundation enables NCX to optimize carbon sequestration potential and streamline processes for landowners, allowing them to participate in carbon markets effectively.

The company’s robust approach to carbon accounting, along with its commitment to developing verifiable and high-quality carbon credits, sets it apart from competitors in the market. Through initiatives like NCX Basemap, which compiles a decade's worth of detailed forestry and climate data, NCX can generate accurately measured baselines for carbon projects, ensuring that both corporate clients and landowners benefit from credible credit verification.

Industry Overview in the Target’s Specific Country

The market for voluntary carbon credits has been experiencing exponential growth, driven by a surge in corporate climate commitments over the past two years. Currently, 38 percent of companies in the S&P 1200 have set or are in the process of setting net-zero targets, representing a monumental increase from just one percent five years ago. This dynamic shift signifies that corporations are increasingly allocating both resources and investment toward mitigating their climate impact.

In tandem with these commitments, the voluntary carbon market has seen a marked increase in activity and investment. The market's value doubled in 2020 and tripled in 2021, surpassing $1 billion in trades for the first time. Major corporations, including tech giants like Microsoft and sustainability leaders such as Stripe, are already making substantial financial commitments to acquire carbon offsets, hinting at an escalating demand that is only expected to grow.

With increasing demand, the voluntary carbon market is likely to encounter supply constraints reminiscent of the EU Emissions Trading Scheme (ETS), where compliance pressures led to a dramatic increase in carbon credit prices— from approximately €30 per ton to over €90 per ton recently. As corporates face greater scrutiny over emissions targets, a similar scenario could unfold in voluntary markets, reinforcing the need for quality carbon credits from reliable providers and further elevating the importance of NCX's offerings.

Additionally, natural climate solutions, like those provided by NCX, stand to play a pivotal role in achieving the emissions reduction commitments outlined in the Paris Agreement. Industry experts posit that these solutions have the capacity to deliver up to one-third of the emission reductions needed by 2030, underlining the urgency for scalable and effective carbon management strategies.

The Rationale Behind the Deal

The decision by Energize Ventures to lead the $50 million Series B funding round for NCX stems from a comprehensive examination of the carbon marketplace and the need for effective solutions to address climate change. Recognizing NCX's strong underlying technology and data-driven approach, Energize is well-positioned to support NCX in expanding its offerings and increasing the accessibility of the marketplace to landowners.

Furthermore, the strategic partnership between Energize and NCX promises to foster growth by leveraging Energize’s experience in scaling clean energy initiatives and insight into the budgets and purchasing decisions of numerous corporate clients. This alignment is expected to accelerate NCX's capacity to meet burgeoning demand for high-quality carbon credits.

Information About the Investor

Energize Ventures is a well-regarded entity in the climate and sustainability investment space, focused on exploring innovative technologies and solutions that drive environmental change. The firm has a history of aiding companies in scaling commercial operations, particularly in climate software and renewable energy sectors.

The firm's experience will prove invaluable as it collaborates with NCX to harness its knowledge in renewable energy project development and create pathways for more efficient carbon credit markets. This partnership is expected to enhance NCX's operations and outreach, ultimately supporting its mission to connect landowners and help them contribute to sustainability objectives.

View of Dealert

From an investment perspective, the deal between Energize Ventures and NCX appears to be a strategic and forward-thinking venture. The growing urgency for high-quality carbon credits—especially in light of rising corporate commitments—positions NCX as a key player in the voluntary carbon market. Energize’s backing will not only help NCX scale effectively but also aligns with the firm’s focus on impactful climate solutions.

Moreover, NCX's rigorous carbon accounting methodologies and its ongoing commitment to using advanced technology to ensure high-quality credit verification further bolster the case for this investment. As supply constraints loom in the voluntary carbon market, NCX is likely to see increasing demand for its credible credits, making it a pivotal player in the evolving landscape.

Additionally, Energize's resources and expertise can significantly accelerate NCX’s expansion efforts, positioning the company to capitalise on emerging natural capital markets. Given the data-driven nature of NCX's approach, paired with Energize's guidance, this investment could yield substantial returns while fostering important environmental initiatives.

In conclusion, this partnership stands to benefit from the robust momentum building in the carbon marketplace, cementing NCX's role as a leader ready to meet the complex demands of corporations striving for sustainability. As market dynamics shift, NCX’s innovative solutions are well aligned to capture both present and future opportunities.

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