Lithos raises $6.3M for volcanic carbon farming

Seattle-based Lithos raised a $6.3 million seed round to give away basalt to farmers — and, in turn, capture vast amounts of carbon.

Why it matters: This isn't a mere ag-tech or carbon play. Lithos also aims to become the go-to software provider for carbon accounting and management for soil-based carbon removal.

Details: Union Square Ventures, Greylock Partners and Bain Capital Ventures led the all-equity round.

• It's the first climate-focused investment for both Greylock and Bain.
• Carbon Removal Partners, the Carbon Drawdown Initiative, Fall Line Capital and Cavallo Ventures participated.

What's happening: Lithos is already the largest carbon credits supplier for Frontier — the $1 billion marketplace backed by Stripe, Shopify, Meta, Alphabet and McKinsey.

• It’s also working with Yara, the Norwegian chemicals giant that is among the largest suppliers of nitrogen-based fertilizers.
• Agriculture generated about 11% of U.S. greenhouse gas emissions in 2020.

How it works: Lithos provides basalt to farmers, who then spread it across their fields to improve crop yields.

• Lithos customizes each use to match every farmer's particular crop, soil conditions and farming practices.
• The company then measures how much carbon the basalt captures and sells those credits to buyers.
• So far it's been sprinkled across more than 1,000 acres.

What they're saying: "Ten percent of this is the chemistry of the rock," co-founder Mary Yap tells Axios. "The rest is what happens when you get the rock and spread it in a field."

Zoom in: Carbon credits are the company's primary revenue stream — and "the profit margins are very healthy," Yap says.

• That lets the company give the basalt away and also share a cut of its carbon credit revenue with farmers.
• Lithos is planning to eventually license its technology to third parties.
• "We’re trying to get to a billion [tons] captured as quickly as possible," Yap says.

The intrigue: Greylock and Bain have traditionally focused on software. What drew them to Lithos is the company's goal to become the software provider for carbon credits management.

• "We think every farmer will be farming carbon alongside their crops. And Lithos is the opportunity to be their carbon accounting and analytics system," Aaref Hilaly, a partner at Bain Capital Ventures, tells Axios.

• Union Square Ventures has previously invested in carbon startups focused on the forests and the seas — and had been seeking a similar play for soil, investor Mona Alsubaei tells Axios.

What we're watching: Lithos is a logistics-heavy business, responsible for sourcing the basalt, transporting all that heavy rock to farms, collecting samples to measure carbon capture — all while maintaining what will have to be a top-flight website to reach its unicorn aspirations.

• "You're working with farmers, shippers, and enterprise sales," Mike Duboe, a partner at Greylock, tells Axios. Duboe adds that a focus in the months ahead will be streamlining logistics and getting scale there.

One fun thing: Yap, whose previous startup was the social payments company Tilt, which Airbnb acquired, co-founded Lithos with professors from Yale and Georgia Tech.

Editor's note: This story has been updated to correct a word in Yap's quote in the "Zoom in" section to "capture" from "dollars" (transcription error). The story also corrects the fundraising figure to $6.3 million in the headline and first sentence.