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Every month we feature members from the Everything Marketplaces community to help highlight their story, marketplace journey, and share more about what's ahead. In this member feature we highlight Mark Chen, who's the Founder of CNaught. CNaught is a marketplace that makes it easy for companies to purchase a diversified, science-backed portfolio of carbon credits in minutes.
Two prior experiences came together to plant the seed of CNaught:
During the first "cleantech" boom of 2008-2012, I led marketing at a venture-backed solar company. That market took off because a) costs came down, and b) financial innovations like solar leases made it really easy for homeowners to install solar with no money down and instantly lower electricity bills.
After that experience, I switched gears and joined a friend from college in starting Rev, a labor marketplace initially focused on document translation. The key realization we had was that when the buyer doesn’t know how to assess quality, in that case, because they couldn’t understand a foreign language, they shouldn’t be the ones making the decision to select a service provider. Rev ultimately expanded into audio transcription and then shifted to AI as the company was sitting on a gold mine of training data.
I left Rev to focus on climate and after my son asked for carbon credits for Christmas, I realized that the market for carbon credits was completely broken. Buyers were being asked to choose among thousands of projects across multiple vintages and were overwhelmed with the decision and lack of information. I knew that this was the same problem that I had faced before and knew the solution.
As soon as I thought there was an opportunity, I wrote down my hypotheses and talked to folks involved in corporate sustainability to test them. It was especially great to talk to people who had not previously purchased carbon credits, so I could learn about the barriers to adoption. Then I engaged friends and advisors. Steve Siger was particularly helpful in thinking through early ideas and he ended up joining me in starting CNaught.
Early on, our biggest challenge was to convince others that we had gained the relevant expertise to both identify high quality carbon projects and acquire customers looking to purchase credits.
It is far too hard to be a corporate buyer of carbon credits today. At every step in the buying process, buyers face meaningful risks and logistical challenges. While it is increasingly clear that most companies will need to rely on carbon credits as part of their decarbonization strategies, the market is growing more complicated. And even as companies face increasing pressure to buy high-quality credits to avoid accusations of greenwashing, they lack internal resources both in terms of time and expertise to deliver real impact.
The typical corporate buyer of carbon credits lacks both time and carbon credit expertise, even companies with full-time sustainability teams, carbon credit-purchasing representing a small fraction of their role and employees cannot be experts in carbon credits. In fact, 60% of sustainability team members are not sustainability experts at all according to a BCG/Microsoft survey, and only 5% of sustainability team member time is spent on carbon credits versus other priorities.
CNaught provides buyers with an affordable, diversified, and science-backed portfolio of high-integrity carbon credits. Our off-the-shelf portfolios are based on the latest in scientific findings, our in-house team of experts, and unbiased third-party research and condense what would otherwise be a multi-stage process into a single step, while also enabling buyers to have confidence they are driving real impact.
Our platform-choose marketplace approach simplifies the purchasing process for buyers while also delivering faster transactions, lower costs, and greater carbon credit integrity.
We hacked the cold start problem by purchasing carbon credits directly from suppliers rather than trying to broker transactions and match supply with demand. Like many other marketplaces, we knew that initially, demand would be harder to get, so this is where we focused. We signed up design partners that provided feedback on the product and we fulfilled their initial orders from the inventory we had on-hand. These design partners led to our first fully-paying customers and led to increased need for supply. Now that the flywheel is spinning, our volumes enable us to secure supply at costs significantly lower than our initial purchases and directly with providers that would not have given us the light of day when we first started.
The biggest (and most pleasant) lesson that we’ve learned is that the size of the customer does not correlate with their level of sophistication when it comes to sustainability. While SMBs often lack the resources to design a comprehensive sustainability strategy or have a full-time sustainability leader, even large, publicly traded companies often lack the expertise to handle carbon purchases internally. As a result, we have been able to grow the average size of our customers by an order of magnitude over the past 12 months with little impact to our messaging, sales process, or product.
The vision for CNaught is to reduce the amount of greenhouse gasses in the atmosphere by one gigatonne over the next 5 years. To deliver on that, we will need to sign up thousands of customers that have never before purchased carbon credits. This requires substantial education of a broad set of stakeholders – sustainability decisions typically involve more than one C-level executive.
We’ll also need to make it easy for these new buyers to access carbon credits, including integrating with carbon accounting platforms, partnering with consultants and certification bodies, and building reporting tools to meet our customers’ regulatory needs.
Furthermore, to scale up, we will need to use technology to automate much of the decision-making for project due diligence and portfolio design. Of course, this includes AI and developing more accurate models for predicting carbon project performance, but it also means creating the technical glue to connect with legacy carbon registries that were not designed with automation or small buyers in mind. We believe our roots in Silicon Valley with innovation and marketplace design at our core give us a huge advantage in addressing this challenge.
This quarter has been really successful in terms of both customer wins and improvements to the product. In 2025, we’ll be investing more in getting that message out there, building our brand, and educating the market on the benefits of using carbon credits. We’ll need lots of help in getting there, so we’ll be building out the team, particularly in go-to-market functions like sales and marketing.
Connect with Mark in the Everything Marketplaces community.
