Neutral Secures $3.2M to Build Market Infrastructure for Environmental Assets

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Neutral is pleased to announce a $3.2 million financing round. The investment was led by North Island Ventures, with contributions from Redalpine, Digital Currency Group (DCG), Cerulean Ventures, Factor Capital, Very Early Ventures, and Rarestone Capital.

Environmental assets, which include carbon credits, renewable energy credits, and other environmental commodities, have seen a substantial uptick in demand in recent years. This growth is expected to accelerate exponentially, driven by the global push towards sustainability in the wake of the Paris Agreement. Alongside the increased momentum in environmental asset markets, traditional market infrastructure is moving towards leveraging blockchain technology and tokenized assets for improved trade, settlement, and transparency.

In building advanced market infrastructure for the environmental asset markets of the future, Neutral stands at the intersection of these two global trends. The company is using the initial funding to launch a regulated exchange in Europe, with plans to expand into other jurisdictions in North America and Asia.

"Environmental asset markets price and provide funding mechanisms for sustainable activities, such as carbon sequestration or renewable energy production,” said Farouq Ghandour, Neutral CEO. “As we see ever-increasing interest from businesses and sovereign entities to invest in sustainability, we need the right infrastructure to price and trade this new generation of assets. Neutral is building that infrastructure and we are excited to bring it to market.”

In addition to launching a regulated exchange for environmental assets, Neutral works closely with partners to create liquid instruments similar to those found in traditional commodity and debt markets. These will be available to trade on its platform. Environmental assets are unique in that they are meant to represent similar outcomes, such as a ton of carbon captured or a megawatt-hour of renewable energy produced, but have characteristics that differentiate them. These include methodology, location, and the year of a given intervention. These differentiating factors make it difficult to design effective liquidity instruments, resulting in reduced trade efficiency and growth. Alongside the exchange, Neutral will help build out the next generation of liquid instruments to catalyze growth in environmental asset markets.

“We believe that tokenized environmental assets will be one of the first categories of real-world assets that are ‘born’ on-chain. These assets will need a new sort of venue, to enable liquidity and price discovery, so they can eventually make their way to end-buyers determined to use markets to reduce the impact of climate change. We expect Neutral will be that venue, and are extremely excited to work with their team.” – James Hutchins, Co-Founder of North Island Ventures.