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Are you selling products or carbon credits?

July 27, 2021

In my last message, I talked about carbon removal through capture, sequestration, and products, and how startups should focus on one. Picking up from there, I often meet carbon removal founder choosing between sequestration, products, or both. However, building a business to sequester carbon is different than one to make carbon into products.

For AirMiners Launchpad we interviewed Henrietta Moon, CEO of Carbo Culture about how her company has navigated these different opportunities in sequestration and products.

Here's how to break it down (and here's the video you can watch):

Are you going to create a physical product that’s useful? (known as utilization). Are you going to bank on companies and governments paying you to remove carbon from the air (through carbon credits)? Do both?

Depending on your choice you'll need to...

1. Get good at products

2. Get good at carbon credits

3. Get good at products AND carbon credits

Building a sequestration business or a product business require different skills. You can try to get good at both skillsets, but you will likely get beaten by someone who is really focused on one.

The landscape is changing too. In the last 12 months the price and demand for carbon removal credits has exploded. Stripe, Shopify, and Microsoft are buying up millions of dollars of carbon removal credits, South Pole just announced a new $100M fund to buy carbon removal credits, and NASDAQ just acquired a majority stake in Puro.Earth carbon removal marketplace.

My hypothesis has been that biggest market for carbon was going to be utilization, and that carbon credits kinda sucked. But the recent growth of the carbon removal market is getting me to re-think. Are we going to see traditional "utilization" companies who go all in on carbon credits instead? What about a biochar startup that flips the script, just selling carbon credits and pays farmers to use their biochar instead of trying to sell to farmers?

Overall, these different paths require different skills. What we’re doing at Launchpad is helping to build carbon removal business, on the path to creating an entire carbon removal industry.

Where are you at on this? Do you prefer one type of company over another?

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