The land regeneration company is seeking to revive degraded land working with local communities, while providing high-quality carbon credits.
Cultivo, a US-based land regeneration company seeking to provide high-quality carbon credits, said it had raised $14m (€13m) in a Series A funding to further develop its AI-driven technology platform.
The funding round was co-led by Singapore-based MassMutual Ventures and UK-based Octopus Energy Generation, with participation from Peru’s Salkantay Ventures and Mexico’s Peña Verde. It brings Cultivo’s total funding so far to more than $20m.
Cultivo has also signed an agreement with Octopus Energy Generation under which Octopus would inject up to $40m in natural capital projects in North America, Europe and Australasia.
The company is a Public Benefit Corporation, which aims to regenerate and protect land to improve ecosystem productivity, biodiversity and resilience. Former Bank of England governor Mark Carney was a high-profile addition to Cultivo’s board in 2022.
It generates returns through commercial offtake agreements based on the amount of carbon sequestered by restoring degraded land, biodiversity gains or water retained at its projects. Under an offtake agreement, a buyer agrees to purchase a set amount of, for example, carbon credits at a given price over a period of years.
Cultivo said its ecosystem services are certified and audited to ensure they make a permanent difference and that their impact is additional – beyond what would have occurred otherwise.
According to the company, its pipeline of 284 natural capital projects around the world covers more than 100m hectares – an area equivalent to more than three times the size of Germany. These have “the potential to remove more than 3 Gigatons of carbon dioxide”, roughly the same as the EU’s annual carbon emissions in 2022.
The most advanced projects of those where land is already being regenerated are an afforestation and agroforestry project in the US, sustainable grasslands management projects in northern Mexico, and improved forest management projects elsewhere in Mexico. Of the projects in the pipeline, some 55-60% are sustainable grassland management projects, and the rest of the projects are split evenly between afforestation and reforestation, improved forest management and mangrove restoration, the company told Impact Investor.
Growth in the project pipeline has been driven by demand from financial institutions and firms seeking to originate their own natural capital projects, such as those that regenerate degraded land through sustainable grassland management or reforestation activities, the company said.
Carbon credit quality
Cultivo’s CEO and co-founder Manuel Piñuela said there was increasing demand for demonstrably high-quality carbon credits at a time when doubts persisted over the quality of some carbon credits in the market.
“Investors are recognising the value and scale of the natural capital investment opportunity, and companies are wanting to secure a future supply of high-quality carbon removal credits to mitigate volatility and quality concerns seen in the voluntary carbon market,” he said.
Cultivo identifies suitable projects using a wide range of sources, including satellite technology, data from which is analysed by in-house AI-driven software. It then works with NGOs and landowners to prepare projects for investment, before designing appropriate investment structures. Projects are monitored to measure increases in carbon capture, biodiversity, and water storage, as well as assessing social impact on local communities.
Public Benefit Corporation status means Cultivo’s board is allowed to target a specific public benefit, and that the board is allowed to make decisions based not solely on the economic interests of financial shareholders, but also on the interests of those materially affected by the company’s conduct, such as employees, customers, communities and the environment.
Octopus Energy Generation manages 3.2 GW of renewable energy projects, worth an estimated £6bn, including wind and solar farms, across 17 countries. MassMutual Ventures is a venture capital firm that invests globally in climate technology, financial technology, enterprise software as a service, healthtech, and cybersecurity. It manages more than $1bn in investment capital.
Mobilising impact-oriented private investment in land regeneration and reforestation projects that sequester carbon are seen as a vital component in efforts to speed up efforts to reach ambitious net zero targets.
In December, French-based impact investor Mirova said it had launched a second blended finance vehicle focusing on sustainable land management, aiming to raise €350m from public bodies and institutional investors. Expanding the environmental credits market to include biodiversity credits has also been a hot topic, albeit a controversial one.