Climate-tech Trace raises $1.9m to help SMEs measure and cut carbon emissions

Climate-tech Trace raises $1.9m to help SMEs measure and cut carbon emissions

Trace co-founders Joanna Auburn (left) and Catherine Long (right).

Sydney-based carbon management platform Trace hopes to attract 1,000 small-to-medium enterprise (SME) customers by the end of the year following a $1.9 million raise to bolster technological and marketing capacity.

Following a $400,000 pre-seed round, the company has secured an additional $1.5 million in funding - which was a collaborative effort between angel investors and 21 firms, including 5 Pillars Capital (a private family office associated with Kilara Capital), The Fund, Epoch Capital and Existential Capital.

Trace co-founder Catherine Long told Business News Australia the influx of cash will have two primary objectives - both involving the recruitment of staff.

“One [objective] is building our technology team so that we can keep improving and enhancing the features within our product - making the process of measuring your carbon emissions even easier, more accurate, and hopefully more real-time,” 2021 Sydney Young Entrepreneur Finalist Long said.

“The second one is building our marketing and sales capabilities so that we can get Trace into the hands of as many SMEs as we can over the next year to 18 months.”

Founded in 2020, the climate tech initially focused on helping individuals reduce their carbon footprint, but the founders quickly realised there was a gap in the market for enterprises that couldn’t afford to employ in-house sustainability teams. 

The duo ran into the issue firsthand while operating their first business venture - leather handbag company est2026.  

“We thought: Wow, there's a huge opportunity to help businesses like ours, create sustainable brands. Frankly, we just found it really difficult because we're not experts. We didn't have loads of time and we didn't have a massive budget,” Long explained.

“That's really where the idea of Trace came from - to use technology to make it easier for companies to become climate positive and do the right thing by sustainability.”

The company continues to operate a monthly subscription service for individuals, which 600 people have signed up for. However, its shift to SMEs has introduced a different type of payment model, which charges a business based on the tonnage of its carbon footprint.

For each tonne offset, Trace is able to purchase a carbon credit, which is put towards selectively chosen projects typically certified by the Gold Standard – a global body that sets best practice standards for sustainability projects – to help reduce CO2 pollution in the atmosphere.

The carbon credit can go towards a range of projects, including Rimba Raya Peatlands Conservation which protects a highly endangered ecosystem in Indonesia by forming a patrolled buffer zone between bulldozers and the Tanjung Puting National Park, home to one of the last remaining wild populations of orangutans on earth.

Trace has also chosen other projects across the world, including helping supply freshwater in Rwanda, providing geothermal energy in Turkey’s Aydin province and assisting the development of six wind farms in the New Caledonian regions of Prony and Mont Kaféaté. 

More locally assisted projects include the revegetation of native plants at Mount Sandy Conservation in South Australia, bushland restoration in Victoria and tree planting in Western Australia’s Tootanellup Nature Reserve.

Long is optimistic about the tech behind Trace’s emission calculation engine, which can determine a businesses’ carbon footprint within 48 hours, provided the data submitted to the platform is accurate.  

“It's a work in progress - we're really pleased with it. We've had it validated by some experts in the field, but I think there's a real opportunity for constant improvement and innovation because what we're trying to do here is balance simplicity and credibility. Finding that balance is our key to success,” she said.

“The version that we've got now has been a year in the making. We launched the first version in December 2020 and it's been evolving ever since.

“We're actually going through an exercise at the moment [and are] using energy consultants to enhance that model and make sure we're using all of the latest best practice in the field.”

The price of carbon credits has surged in recent months, with market research house RepuTex finding the prices for Australian Carbon Credit Units (ACCUs) grew by 209 per cent to end–December, reflecting a 23 per cent increase over the final month of 2021.

Voluntary demand for ACCUs is also increasing, rising from 25,000 ACCUs in 2014-15 to over 300,000 ACCUs in 2018-19.

Long views the acceleration as a positive trend.

“This is what carbon is worth. It's not expensive, it's the cost of fixing the planet and creates a stronger imperative for businesses to decarbonise faster. We’re encouraged to see that demand from SMEs willing to invest in taking action is accelerating,” she said.

Antler associate partner Laura Falconer says Trace “has already found strong early traction in a growing market.”

"We’re proud to be a long-term supporter and investor of Trace since our pre-seed investment in 2020…as people and organisations around the world become increasingly aware of their impact and seek innovative ways to offset their carbon footprint, Trace is well-positioned to provide a way forward,” she said.

The majority of Trace’s 120 SMEs are based in Australia or New Zealand, of which six joined the funding round.

"Epoch is proud and excited to support Trace, first as a client and now as an investor,” Epoch Capital founder and managing director Michael Humphreys said.

“Trace's approach is both engaging and simplifying, taking away the frictions individuals and companies experience when navigating the journey to Net Zero.”

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