As organizations focus on climate impact and risk management in their sustainability efforts, many overlook the crucial aspects of nature-related risks and effects. Biodiversity loss and ecosystem degradation pose significant threats, prompting the international Taskforce on Nature-related Financial Disclosures (TNFD) to develop recommendations for nature-positive protocols. Natcap is a pioneering data and advisory platform that allows companies to identify key nature-related metrics, implement effective measurement strategies, develop comprehensive reporting frameworks, and receive tailored recommendations for corrective actions. As a trusted advisor in this emerging field, Natcap aims to integrate nature-related risk into all sustainability discussions. The platform enables businesses to create robust operating and data models that not only prepare them for potential regulatory changes but also help mitigate the impact of nature-related risks on their operations. The company’s revenue model is two-fold with subscriptions for software implementation and fees for advisory services.
London TechWatch caught up with Natcap CEO Sebastian Leape to learn more about the business, the company’s strategic plans, latest round of funding, which brings the company’s total funding to $13.4M, and much, much more…
Who were your investors and how much did you raise?
Natcap has raised a $10M Series A funding round. Investors in this round included André Hoffmann, Norinchukin Capital, Yeo Ventures, Pelican Ag, and former CEO of Refinitiv David Craig. The round also included existing investors from Oxford Science Enterprises, funds advised by MW&L Capital Partners, and Alea Iacta Est.
Tell us about your product or service.
Natcap is a software and advisory company that helps organisations move beyond a narrow focus on climate and embed nature more broadly into their decision making. This allows companies to future-proof against nature-related risks; captures nature-related business opportunities; and meet mandatory regulatory requirements with confidence.
What inspired the start of Natcap?
Natcap was originally founded in 2018 by Baroness Kathy Willis at the University of Oxford, who was serving on the UK Government’s Natural Capital Committee at the time. Along with other academics, she wanted to bring the latest academic research on measuring nature to businesses who were starting to manage nature risk and reduce their negative impacts on nature.
How is it different?
When it comes to measuring and reporting on nature, many companies are unsure what they should be measuring and how to do it. There are an overwhelming number of historic datasets available. While some are a great place to start, they are generally not aligned with the TNFD, CSRD, and SFDR frameworks that corporates are using to measure and report on nature. They also often lack the granularity needed for the data to be decision useful for companies – for example the ENCORE dataset will provide companies in the same industry with the same results no matter how they manage their operations to supply chain. It is nearly impossible to aggregate insights from disparate datasets into one useful nature related assessment across tens, hundreds, or thousands or data inputs from a company’s operations or supply chain. Most concerning of all, these datasets are query datasets that provide a one-off insight but do not allow you to track performance over time.
Natcap gives companies all the useful data they need to measure, report and act on data. We use software and our advisors to securely curate, aggregate, and analyze relevant nature data for businesses. This ultimately saves time and money for companies with limited internal capacity and tight budgets to hire consultants. This approach, underpinned by the world’s best nature datasets, enables them to not only report with confidence under relevant regulations, but also to future-proof their businesses based on the data we provide.
What market are you targeting and how big is it?
Companies are facing new and complex regulations for reporting their impact on nature, like the EU’s CSRD and ESRS mandates. Further, many companies realise that measuring their own nature-related risks and opportunities – under frameworks like the Taskforce for Nature-related Financial Disclosures – makes for good business practice.
These companies are our target markets: particularly the 50,000 companies required to report under the EU’s CSRD requirement, and the 400 organisations that have come forward as TNFD early adopters.
What’s your business model?
We charge large companies a subscription fee to use our software platform, and a competitive fee for advisory services.
How are you preparing for a potential economic slowdown?
Since CSRD is a legal requirement that is already being implemented, we don’t anticipate any economic slowdown would have much effect on our customer base. We are proud to have been successful at fundraising at a time when many investors are conserving dry powder and tightening their due diligence processes – we take this as a positive sign about our potential for growth even in non-optimal market conditions.
What was the funding process like?
This is certainly a difficult fundraising environment, and investment at series A has dropped considerably since 2021 highs. But many investors in Europe and Japan ‘get’ that nature is the next frontier for the corporate sustainability agenda and saw Natcap brought together the right team and technology at the right time to capture this new market. Natcap also stood out through its connections to world-leading universities, such as the University of Oxford, as well as its early success working with leading global corporates. Perhaps most important, many investors agreed with our assessment that the market for nature intelligence would be ‘sticky’ and that customers would work with Natcap in the long term to meet their recurring annual needs. This is because nature is complicated and there are no agreed standards for measuring nature-related metrics so companies are incentivised to stick with the same partner to ensure year on year comparability of data. This makes Natcap’s position as an early leader all the more important.
What are the biggest challenges that you faced while raising capital?
The primary challenge while raising this round was around the broader macroeconomic conditions, including a slowdown seen in climate tech investment – which has to date been relatively resistant to the downturn – in the first half of 2024. We are proud to have been able to raise, even in this difficult environment, and believe our oversubscribed fundraise underscores the value investors see in our business and in the broader nature market.
What are the milestones you plan to achieve in the next six months?
We are focused on ensuring we continue to have the world’s best product for measuring and reporting on nature. We will invest in growing our science and engineering team to do this – focused initially on improving our risk assessment capabilities. We will also be growing our customer base by investing in marketing to improve brand awareness and growing our partnerships with leading consultancies.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
It goes without saying that the best way to attract capital into a technology business is to build the right product, with the right team, at the right time, for an attractive market. But there comes a point when you have done your best and you have to take wherever you are to market and convince investors to back you. Fundraising is hard, so it is critical to get the process right – and not to waste time. My main learning from Natcap’s series A is the importance of figuring out the investor profile that you are most likely to be successful with as early as possible – and not spending your precious time with others.
Where do you see the company going now over the near term?
We aim to be the world’s leading nature intelligence company, helping companies initially measure and report on their interactions with nature but ultimately to deliver on targets to achieve nature-positive goals.
What’s your favourite outdoor activity in London?
Cycling up to Ware along the river Lea through the Walthamstow wetlands, the Girling reservoir and River Lea Country Park. It gets surprisingly rugged and beautiful!
