Exclusive: RenewWest raises $3.2M to finance reforestation

RenewWest, a Denver-based startup that helps finance reforestation projects, raised $3.2 million in funding, the company exclusively tells Axios.

Why it matters: Nature-based projects are feel-good investments that are hard to resist for even the most staunch ESG opponents.

Details: Aspiration and One Small Planet co-led the all-equity round and are gaining board seats in the deal. Clear Sky Advisors, a subsidiary of Concord Ltd., also participated in the round, which closed in November.

How it works: RenewWest develops and finances reforestation projects using carbon credit sales from those projects and takes its own equity stake in the project.

• It uses software to analyze what type of reforestation project or hybrid land use structure would result in the highest quality carbon credits it can then sell to finance more projects, COO Adrian Reif tells Axios.
• It is developing projects like mangrove restoration and tree-planting in the U.S., Peru, Mexico, Jamaica and Papua New Guinea.

Context: Carbon markets are still a bit of a Wild West ecosystem rife with low-quality credits and hard-to-verify data.

• RenewWest says it is vetting and financing the projects from which it sells the credits, and can vouch for the credits' quality and verify the projects' effectiveness.

Yes, but: Building an entire business on top of carbon markets is still akin to building on top of a house of cards.

• One piece of legislation or eroding business confidence in the credits' effectiveness could send the whole thing tumbling down.

What we're watching: If the Inflation Reduction Act can help solidify the carbon markets and project financing, expect more fintech startups to add nature-based projects to their lists of investments.