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Earthshot Labs, a carbon project marketplace, raised a $5.5 million Series A, the startup tells Axios exclusively.

Why it matters: The company aims to bring rigor to a market riddled with mistrust and uncertainty.

How it works: Earthshot Labs promises accuracy to credits buyers, project developers, and investors who see an opportunity to generate returns by funding carbon projects.

"We need this to create an investable asset class," CEO Troy Carter says.

Instead of simply selling credits in an online marketplace, Earthshot Labs facilitates long-term offtake agreements between credits buyers and carbon project developers — similar to power-purchase agreements with a solar or wind farm.

The site has facilitated about $55 million in project finance over the past two years, Carter says. 

The intrigue: Carbon offsets have been beset by inconsistent accounting, flawed carbon estimates, and other problems that have chilled investment.

Polluters can "offset" emissions by buying credits from reforestation projects, conservation programs and other efforts aimed at restoring nature to remove heat-trapping carbon from the air. 

The model brings revenue to projects that are otherwise hard to monetize, from dirt-simple tree planting to cutting-edge direct air capture. 

Zoom in: Acorn Pacific Ventures led the company's all-equity round, which closed in June after a roughly four-month raise.

Earth Foundry, Future Ventures, Resilient Earth Capital, One Small Planet, Sand Hill Angels, and Orca Capital participated.

The Sebastopol, California-based company is turning a profit, Carter says.

Exclusive: Earthshot Labs raises $5.5M for carbon markets finance

It promises rigor for credit buyers, sellers and investors.

Illustration of the carbon dioxide symbol surrounded by fans of money with the "O" replaced by the no symbol.

Carbon emissions

Earthshot Labs, a carbon project marketplace, raised a $5.5 million Series A, the startup tells Axios exclusively.Why it matters: The company aims to bring rigor to a market riddled with mistrust and uncertainty.

Exclusive: Earthshot Labs raises $5.5M for carbon markets finance

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