Flowcarbon Returns $70M to Investors as GNT Token Project Fails to Launch

The firm highlighted several issues responsible for the failed launch including, unfavorable market conditions, and challenges with carbon registers. It also mentioned that the voluntary carbon market is under intense pressure regarding carbon credit quality.

In 2022, Flowcarbon raised $70M with the support from Andreessen Horowitz and other prominent investors. Famous Hollywood producers Sam and Ashley Levinson of General Catalyst and Samsung Next also contributed to its Series A investment.

GNT sales contributed at least $38 million to the total amount raised although it is unclear if this figure comprises retail buyers.

The concept involved developing a token supported by carbon credits to remove one metric ton of carbon dioxide from the atmosphere or prevent it from entering the environment. The cryptocurrency would have been exchanged on the Celo blockchain, which had purchased $10 million GNT to manage its own emissions.

It was recently revealed that the business has been repaying funds to investors following prolonged delays in implementing its goals. However, this announcement also raises the question of whether Flowcarbon suffered such a major collapse due to internal or external issues.

The firm’s issues and refunds indicate significant challenges in the larger carbon market. Notably, the two main hurdles are rising asset volatility and the tokenization of carbon credits. The project intended to use its GNT coins to tokenize carbon credits so that investors could access them from anywhere in the world.

Flowcarbon confirmed that it had initiated the refund process last year in response to queries from Forbes. However, the firm decided to maintain private correspondence with its sponsors rather than publicly disclosing the reimbursements.

The firm encountered similar challenges as other crypto-carbon projects initiated before GNT. Toucan and KlimaDAO, for example, tokenized multi-millions of retired carbon credits in 2021, raising questions about double counting from registries.

In response, Verra, one of the biggest global providers of greenhouse gas credits, banned retired credit tokenization in 2022. This decision subsequently caused Flowcarbon’s financiers to become frustrated since it hampered the company’s efforts to generate tokens.

It’s interesting to see that the startup has continued to operate normally despite the ongoing reimbursements. The firm confirmed in a recent social media post that the next CarbonSmart summit will take place on September 23rd.

Newman has raised millions of dollars from investors since the carbon credit venture was launched. However, experts warned that merely facilitating the purchase and sale of credits would not significantly address the fundamental causes of climate change.

Bruce Usher, a Columbia Business School professor and former CEO of EcoSecurities said “If a carbon credit is not additional, it’s not addressing climate change.” He also claimed that companies like Flowcarbon cannot address the core issues of carbon markets.

Besides, Flowcarbon, the former CEO of WeWork had other new ventures. In 2022, Newman declared he was launching a new business called Flow to revolutionize apartment living. Apart from GNT projects, Andreessen Horowitz also contributed $350 million to the project, making it one of its single largest investments.

In addition, Neumann has been attempting to buy back WeWork for an amount above $500 million since it came out of bankruptcy in May.