Xilva raises $1.8 million and is fighting fake carbon credits by building the first market place for forest investments

Today Zurich company Xilva announced it has raised $1.8 million in a pre-seed round.

Founded in 2021 by a team of experienced entrepreneurs and foresters, Xilva uses a proprietary methodology to assess forest projects and thus reduce potential risks related to investing in carbon credits and nature restoration initiatives. 

It conducts the due diligence process through its Xilva GRADE® platform, which takes into account multiple criteria, such as ecological integrity, social equity, economic viability, and governance, to provide a holistic and evidence-based assessment of the project's sustainability and impact potential.

I spoke to co-founder and CEO Tim Duehrkoop to learn more. 

Recent media investigations have cast a shadow on the Voluntary Carbon Market, suggesting that a large percentage of carbon offsets are worthless. 

Xilva is here to provide credibility.

With a team of forestry experts, Xilva gathers and cross-references data from multiple sources.

It then conducts further due diligence using its proprietary methodology Xilva GRADE®, which assesses each project's potential impacts and risks and allows capital providers to invest in those that match their ideal profile. 

According to Duehrkoop, part of the complexity is that afforestation is a great climate solution in theory but in practice, historically hard to achieve:

"Investment takes too long, is too expensive, too much money gets lost on the way between the initial funding and transaction costs, middlemen, fees, consultants, etc."

 Xilva wants to make project potential risks and benefits as transparent as possible. This is important as the average project runs for 30 to 40 years. 

We need to focus on biodiversity, not just tree planting

While a lot of carbon offsets focus on tree planting, forest investment not only helps the climate but strengthens biodiversity and improves the livelihoods of local communities:

According to Duehrkoop,

 "You get a bit lost when you talk about a single tree. Forest investment focuses on not just tree planting, but supporting and resourcing an entire biodiverse forest ecosystem, from rivers to wildlife.

You also have to consider the people who use the forests for their livelihood and ensure they have an alternative or, ideally, a better way of making a living. They rely on forest yields and should be part of protecting it."

Afforestation can slow the impact of climate change while also addressing other environmental issues, such as barren land and soil erosion.

Research from Crowther Lab showed that 1 trillion new trees could absorb one-third of CO2 emissions made by humans. In fact, an additional 25% of forested land could sequester 25% of atmospheric carbon, making a significant global impact on rising temperatures.

Are carbon credits a free pass? 
 
Is carbon credits more about companies throwing money at a problem rather than making structural changes within their own organisation?

According to Duehrkoop, companies typically follow a pattern codified by the Science Based Target Initiative, where carbon credits are part of a bigger picture of reducing their carbon footprint. 

"Typically, when someone is buying carbon credits, they've thought about it, and they have actually taken some action (maybe not enough)."

Further, besides complying to meet regulatory targets, carbon zero action drives innovation and strengthens brand reputation. Duehrkoop notes,

"Investors and consumers want climate action. Companies have committed but are now realising that 2030 is very, very close. I am more worried about companies that don't do anything or do very fuzzy actions without consequences ." 

Silva has already signed contracts with an Australian real estate group, Goodman, and a Swiss watchmaker, Mondaine, facilitating transactions worth over $1.9 million towards forestry projects in Asia and Latin America and contributing to the compensation of over 152,000 tons of CO2. 

 Duehrkoop believes that the demand for carbon credits will be higher as we get closer to 2030 and 2050. That means the prices go up.

"So it's good for us. But it's specifically good for enabling more projects. If you get more per tonne of carbon, the carbon price goes up, with every dollar leading to more projects becoming feasible. 

"Ultimately, in the future it will be ideal if only a few carbon credits have to be sold due to substantial successful climate emission reductions. But that's a long, long way off."

The funds from Brainforest, Bloomsbury Natural Capital, Insurtech.vc and a group of international angel investors will be used to build out the Xilva GRADE® platform and increase staffing in marketing and sales.

Lead image: Ali Burham.