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Carbonetworks Raises $5M for Carbon Software

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Carbonetworks, a startup selling software and services to help companies reduce their carbon footprint, announced this morning that it is raising a $5 million series A round from NGEN Partners. As federal carbon regulation looms large in the United States and the European carbon market continues to expand, software systems like Carbonetwork’s are increasingly needed for companies to make and execute carbon management strategies. Just last week we heard that startup CarbonFlow raised funding from Clean Pacific Ventures and OVP Venture Partners for its software for carbon markets.

Carbonetwork’s software calculates and tracks a client’s carbon footprint, and connects a network of partners including carbon traders, verifiers, offsetters, energy analysts and other software developers with the customer. “The best way to get companies and people to change their behavior is to show the connection between the emissions and a market value,” Carbonetworks CEO and co-founder Michael Meehan told us in a phone interview. Carbonetworks wants to provide that service.

To do that, Carbonetworks works as a facilitator in the emerging global carbon market. Customers can build their own custom applications on the platform. When it comes time to manage carbon through offsets, selling credits or planning an abatement scheme, the software connects the customer to the appropriate partner.

About half of Carbonetworks customers are in North America while the other half are in Europe and the Middle East. Meehan explained the difference in the markets: “In the U.S. and Canada we are starting at the low point. They’re just getting their footprint together. They’re still asking ‘If we decide to invest where should we do it?’ [In Europe] it’s a different conversation. They’re saying, ‘We did invest now we need to manage this and forecast it forward.’ ” The company says it has 180 customers, many of them energy and utility companies, in 23 countries.

Many expect federal greenhouse gas emission regulations with the next administration, and Carbonetworks anticipates it will happen as soon as 2009. Already, companies and institutions are changing the way they invest and operate in anticipation of the new market. “A year ago the game was, ‘How are you going to get people to allocate resources and time in carbon management,’ ” Meehan said. “That’s not the case anymore. Now it’s ‘Where am I going to invest my money to manage this?'”

Meehan tells us Carbonetworks has closed $3 million of the $5 million round and plans to use the funds to build out its sales and marketing force. Incorporated in 2005, the company currently has fewer than 20 employees.