Carl Prins grew up in an energy conscious household, a lifestyle that was before its time in the 80’s. But the experience from living in a ‘passive energy’ house stayed with him as his career evolved to see him launch a startup focussed on helping businesses measure, reduce and offset their greenhouse gas emissions.
Pathzero was conceived and launched in 2020, and received its first funding round the same year, as it sought to measure and reduce emissions of small businesses. But in 2021 the team pivoted their approach to also focus on big private equity investors, like super funds, to help them measure the emissions of their portfolio companies.
The original business model targeted only SME’s, those that couldn’t afford consultant fees, or the bespoke greenhouse modelling products that were available. Pathzero’s platform made the process far more efficient; it offered a snapshot view of a business’ emissions based on industry factors, and spending analysis, from which they could then develop a plan for the reduction of those emissions, as well as facilitating offsets for the emissions that remained.
To be clear, they still very much offer this service to any business that’s interested. But as we know, startups move quickly, and they must pivot to find their product-market-fit, and scale in order to survive.
For Pathzero, the shift was driven by demand from the investment industry.
“A friend who runs a credit fund actually called me up and said, ‘Look, Carl, we got this carbon project going on, and we have no idea, can you help us out?’ From there the seed was sewn. He said ‘Well, you know, what, if you could turn that into a monthly subscription business, and it didn’t cost the earth, then you’d really be onto something because we’re all needing to do this now.’” Carl says.
The original iteration had seen them exploring a whole range of climate change factors for their clients, everything from advocacy to carbon markets, but they were able to narrow their offering by listening to the needs of the market.
“So then in September we got approached by one of the superannuation funds, to say, Hey, we’re actually trying to surface this information from our asset managers and their portfolio companies. Is there an efficient way that you could help us with this?” Carl says.
They had to upgrade the methodology and the transparency of the platform to make it fit for purpose with large asset owners. And they brought on a consultant who was certified with Climate Active, to ensure the rigour of any public claims that would be made about their reports.
“We ended up working with two private equity groups: IFM investors, as well as Advent Partners. We applied our technology, and we did calculations of the scope 1, 2, and 3 emissions across all their portfolio companies.” Carl says.
It was only in June this year that they opened up the product to the wider market. It was only a soft launch, but they’ve already had interest.
“Essentially it’s carbon expertise and accounting as a service. And that’s something people have shown they’re prepared to pay for. It’s something that they get a lot of value from, it’s looking really good so far.” Carl says.
The devil is in the detail, and for those working in financial services, they’ll recognise it’s never easy to extract information from companies, and it’s even harder if you’re dealing with the fund manager, rather than the company directly. The team haven’t been put off, and it is in fact the rigour with which they assure their findings that sets them apart.
“Whatever algorithm or benchmark or score you’re using, there’s nothing like getting the actual data from the company. But then if you do that, you need to ensure that you’re getting the right scope of information, and that it’s not just a black box. In the platform we offer, essentially, scope validation and technical analysis.” Carl says. “So if you can evidence all of that, as well as the correct emission factors used, you have a very sound basis upon which to make a public claim or to make a report to investors,”
Interest from Investors
Being part of the Antler ‘startup generator’ ensured at least an initial source of working capital, but Pathzero soon caught the attention of both VCs and angel investors. They raised a $1 million round in October last year, with Brian Hartzer (ex Westpac CEO), Simon Sheikh (founder of Future Super) and Phil Vernon (ex Australian Ethical CEO) backing them, as did Black Nova Group, and Antler.
By August this year they’ll double their staff numbers, which is a clear indication of strong growth.
And, Carl did mention an announcement about the next round of investment was imminent, but he didn’t offer any names or numbers. Rest assured, OnImpact will report back when that’s announced.
Carl originally launched the company as part of the Antler startup generator, and that’s where he met his co-founder Charbel Ayoub, who acts as CTO. The Antler model is unique, unlike a regular startup accelerator, the Antler model involves aspiring founders being offered a monthly wage if they agree to quit their job and pivot to focusing full-time on building a startup. And they don’t need to have a startup idea at the outset. Antler selects individuals that have proven their grit, determination and subject-matter-expertise, and they give them an environment conducive to launching a new company. Then, of course, they take a sizable chunk of equity for their troubles.
“I came on board wanting to find a good co-founder, to use the Antler network and platform to accelerate the pace of the business, and, having done it before outside of an accelerator, I know how it can be quite a slog, and it takes a lot away from running the business. So doing it inside was preferable for us.” Carl says.
Earlier in his career Carl was CFO of a hedge fund in London, Arrowgrass Capital. In 2016 he was working with Westpac’s venture arm, ReInventure. And he did launch another startup prior to Pathzero, it was called Handled, but it fell victim to regulatory changes in the energy market that meant the business was no longer viable. But that’s all part of the process for a startup founder.