Investment Note

Making 'carbon neutral' accessible: why we invested in NetNada

Written by
Tom Smalley
On behalf of the Skalata Investment Team
“Doing your ESG reporting and knowing your carbon emissions is going to be just as essential as doing your taxes is right now.”
Lochie Burke

Sustainability for the SME

With all the goodwill and big CSR budgets in the world, companies are still floundering over sustainability. 

They often end up doing more harm than good - just look at the McDonald’s paper straw debacle, or the more insidious Volkswagen "clean diesel" scandal

Lochie Burke and Afonso Firmo, founders of NetNada, are doing “carbon footprint measurement for your business, the way you’d hope it would be”.

The pair were respectively founding the Kolkata-based River Rangers charity and growing sustainable household product marketplace, Little Pepino, when they came across a big problem for corporate sustainability. 

“2 million Australian SMEs want to do the right thing, but with typical ESG consultant fees hitting $100k, they’re priced out completely.”

“Sustainability is a huge and complex area. Offsetting carbon, cleaning up supply chains, and searching for green solutions amidst the greenwashing is a minefield for non-experts.”

The founders were both passionate about democratising sustainability and began looking for a scalable tech solution, developing ML and AI based software that could automate carbon reporting in an affordable way for all-sized businesses. 

Skalata is excited to work with them in their pursuit of a more equitable, transparent, and greener future for SMEs. Here's why we’ve invested.

NetNada’s early days

The founders had significant early-stage support before they came to Skalata. 

NetNada went through the UNSW Founders program and brought David Burt (Director of Entrepreneurship at UNSW and Non-Executive Director at environmental foundation, Planet Ark) into the fold as a strategic advisor. The team later received an MVP Grant from the NSW Government.

Lochie and Afonso are also graduates of the CSIRO ON Program, and remain heavily involved within the UTS Startups ecosystem.

What we like about NetNada

The reporting NetNada provides is shifting from a differentiator to a licence to operate. For brands big and small, sustainable practices are now non-negotiable. Lochie believes:

“Doing your ESG reporting and knowing your carbon emissions is going to be just as essential as doing your taxes is right now.”

We tend to agree.

Deloitte’s 2022 CxO Sustainability survey of 2000 business leaders found that Australia is among the top 10 countries most concerned about climate change. 95% of Australian respondents said their companies had already been impacted by it, whether through mounting societal pressures, resource scarcity, or regulation.​ 

Australia and New Zealand are NetNada’s key markets at the moment, but the founders believe the market is being led from the UK, where Lochie recently lived and worked on NetNada for three months. 

“I went over to test the hypothesis that that market is further ahead than Australia. And it is. There’s more pressure on businesses. There's more customer demand for environmental products and services. And the uptake of a service like ours would be faster than in Australia. So we have goals to be more aggressive in the UK and the EU over the next 12 to 18 months.” 

The AI-driven SaaS is globally scalable, and applicable across a huge range of industries. 

As far as competition goes, it’s not competition as we know it. 

Lochie says: “I happily acknowledge that there are competitors out there. But that doesn't bother us. This is one of the biggest emerging spaces in the world…arguably, in history. It would be terrible if we were the only ones doing something!”

We love the passion, but differentiation is important too.

NetNada connects directly to a company’s accounting platform (like Xero). The machine-learning software automatically assesses all inputs, and then measures the direct, indirect and supply chain impact of expenditure on the environment (Scope 1, 2, and 3 emissions).

It then suggests the best ways to reduce impact, while also identifying cost savings and automating communications with stakeholders.

NetNada's time to value (TTV) is hugely salient to their success, because it’s almost immediate. The client can look at every carbon liability over every single part of their supply chain and start taking remedial action straight away.

What NetNada clients like about NetNada

A typical NetNada client has between 10 and a few 100 employees (although they do work with larger companies, their biggest being 5000 strong). 

In Lochie’s words, “They want to do something about their sustainability. They don't know how. They don't necessarily have the money for consultants. They don't have the time or expertise to do it themselves.”

The value of NetNada’s service lies with: 

  • Its affordability.
  • Its automation. 
  • Its low barrier to entry, using existing data from clients’ accounting systems to convert purchases into their carbon equivalent.
  • Its ROI. The software analyses business carbon emissions, consumption, and waste and then suggests the best ways to reduce them. But the process also identifies dollar savings.

The future for NetNada 

NetNada has already made some significant sign ups with United Resource Management and Renew IT.

The team is predicting 10x customer growth over the next 12 months, and currently hiring for 5 roles to help them achieve it. As NetNada expands, more data and therefore enhanced machine learning will lead to even smarter algorithms. 

The founders are determined to instil complete transparency and trust in a market where everyone has an opinion. They are very upfront about the fact that carbon offsetting is not a silver bullet solution. 

“We're not a company that just forces people straight to offsetting, because offsetting is not a solution to sustainability and climate change as a whole. It has a role to play, but that role is not to offset all emissions generated.”

As terms like “carbon neutrality”, “net-zero” and “climate positive” start to bleed into the public consciousness, Afonso Firmo reminds us that you can’t offset what you can’t measure.

“The first step to reducing your carbon footprint is understanding how big the shoe is. Our focus is on making complex and opaque data clear and actionable, so business owners can self-regulate.”

While legislation will eventually play a part in enforcing companies to report on their carbon output, NetNada believes that “the cause will lobby itself. It has to. It’s a critical issue that is seriously threatening humanity.”

Founder’s (and investor’s) last words 

Skalata cofounder Darrell Wade has a particular interest in NetNada, having also cofounded Intrepid Travel - the world’s largest carbon-neutral travel company

“With impending changes to accounting standards, carbon accounting will become an essential part of a company's reporting framework. Fortunately, companies can now do the right thing whilst also getting ahead of the compliance curve by using NetNada.” 

In the founders’ words: “From our first meeting with Skalata, it was very clear they shared a similar mentality towards entrepreneurship, innovation, opportunity and impact.”

We love partnering with businesses that not only understand our vision - steady, sustainable growth - but are also doing a lot of good in the world.

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