This former Shopify web developer is applying the e-commerce playbook to climate change. In 2020, Spellacy cofounded Patch, a climate-tech platform that enables do-gooder companies to browse and buy carbon credits from more than 50 project developers that list their climate projects—everything from ocean carbon removal to forest protection— on the site. He has secured $84 million in funding from investors including Andreessen Horowitz and counts more than 400 companies as customers, including software business AutoDesk. In April, San Francisco–based Patch launched an operating system for carbon credit suppliers to easily manage their inventory, logging sales without time-consuming paperwork. Some 440 million tons of credits are currently managed on the platform. Says Spellacy, “I’m a really big believer that markets got us into this problem and are what’s going to drive us out of this problem.”
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LifestyleTranscript
00:00 (upbeat music)
00:03 - Great to be here with you today.
00:04 - Thank you so much for having me.
00:05 - Of course.
00:06 So talk to me about what exactly your company does.
00:08 - Yeah, so I'm one of the co-founders and CEO
00:11 of a company called Patch.
00:12 At Patch, our core objective is to scale
00:15 carbon dioxide removal with software.
00:18 Carbon dioxide removal is a core ingredient
00:21 to fighting climate change.
00:22 So when you think about mitigating the climate crisis,
00:25 there's two core levers you have to pull.
00:28 The first is decarbonizing.
00:30 That looks like rolling out renewable electricity,
00:32 electrifying vehicles.
00:34 But then the second piece is removing carbon
00:36 from the atmosphere.
00:37 We've been polluting for the last 150 years,
00:40 and we actually have to undo some of that pollution
00:42 in addition to preventing further pollution
00:44 in order to hit our climate goals.
00:46 - Now, how did you get the idea for this?
00:47 Walk me through your founding story.
00:49 - Yeah, absolutely.
00:50 So I initially studied chemical engineering at McGill
00:53 with the intention of working in low carbon energy.
00:55 That's how I thought I was going to fight the climate crisis.
00:58 It didn't work out.
00:59 I only got jobs in oil and gas coming out of school.
01:01 And so instead of doing that,
01:03 I worked at a wide variety of tech startups
01:05 for around eight or nine years.
01:07 And then back in April of 2020,
01:09 me and my co-founder, Aaron Grunfeld,
01:10 really wanted to start something of our own.
01:12 And so what we did was we looked at,
01:14 what are the eight or nine things that need to be true
01:16 in order for us to hit our climate goals?
01:18 Going back to those solutions I mentioned earlier,
01:19 so renewable energy, agriculture,
01:22 and carbon dioxide removal was one of those elements
01:24 where it felt like there was no infrastructure
01:26 to get it off the ground.
01:27 And we had very little existing capacity back in 2020.
01:31 We weren't even doing one 1,000
01:33 of the amount of carbon dioxide removal we need to be doing.
01:35 And so we decided to focus on that area
01:37 and understand how we could apply the software skills
01:40 we had learned in past companies we've worked at before
01:42 and apply it to carbon dioxide removal.
01:45 - Very cool.
01:45 Now talk to me about your fundraising journey.
01:47 How's that been for you?
01:48 - Yeah, thankfully it's gotten easier and easier.
01:50 You know, the first round,
01:51 we raised around four and a half million dollars
01:53 from Andreessen, but that took a really long time.
01:55 That was during COVID as well,
01:56 from, I guess that was June or July of 2020.
02:00 So big, big kind of drawn out experience.
02:03 But we've been fortunate enough to raise
02:05 from a really wide variety of folks,
02:06 including Andreessen, CO2, and Energize,
02:09 and have raised around $80 million to date.
02:11 So really thankful to be really well capitalized,
02:12 particularly in this more economic uncertain time.
02:15 So we're just heads down, focused on building
02:17 and doing what's best for carbon markets as a whole.
02:19 - Now, I want to get some sort of a sense of scale
02:22 of your company.
02:23 Talk to me a bit about how many users you have
02:26 or anything like that that'll show me your size.
02:28 - Yeah, absolutely.
02:29 So on the buyer side of the equation,
02:31 we work with around 400 corporates,
02:33 companies as large as EQT or a Bain & Company,
02:36 to a smaller startups you haven't heard of before.
02:39 And then on the supply side,
02:40 we work with around a hundred or so carbon credit developers
02:44 at various stages of scale as well.
02:46 So we have around 400 million tons under management
02:49 in the patch platform, holistically.
02:51 (gentle music)
02:54 - Unfortunately, I feel like climate change
02:57 is just so politicized right now.
03:00 What's your experience been like running a startup
03:03 in kind of a politically fractured industry?
03:05 - Yeah, you know, the policy world
03:07 is actually very new to me.
03:08 I'm coming from kind of engineering and then tech.
03:11 And so I'm spending way more time in DC
03:13 than I initially thought I would have been.
03:15 You know, I think the biggest thing to understand
03:17 is you have to think of these problems in terms of systems.
03:20 And everyone has a slightly different priority set.
03:23 And you know, you can bucket it as right
03:24 or the left in the US,
03:26 but the reality of the situation is
03:28 all of these kinds of global systems,
03:29 whether it's kind of climate change, energy, food systems,
03:33 economic development, or job creation, are all interlinked.
03:35 And so in a lot of time, a lot of cases,
03:37 it's all about just reframing a particular problem
03:40 so that people are excited.
03:41 So I had a great example is the IRA,
03:43 the Inflation Reduction Act,
03:45 is the biggest climate change bill ever passed
03:48 in North American history.
03:49 And what got it over the ledge was in many cases,
03:52 the job creation element, right?
03:53 How do we create great American paying jobs
03:56 that catalyze kind of climate solutions?
03:59 So kind of the right in a lot of cases get what they need,
04:01 where they really want to have economic development
04:03 and maybe in some cases, kind of more economic growth.
04:06 But on the left's case,
04:08 they actually get the climate change solutions they want.
04:10 - So all about the compromise.
04:11 - It's all about finding that win-win in a lot of cases.
04:13 What's the kind of one plus one equals three.
04:15 - Right. - Yeah, exactly.
04:16 - And finally, what would you like your legacy to be?
04:20 - Yeah, so I mean, when I think about my legacy
04:22 or Patch generally,
04:24 I think the biggest thing is putting a dent
04:26 in climate change.
04:27 - Yeah. - You know,
04:28 we need to be removing around 10 to 15 gigatons per year
04:31 by 2050. - Yeah.
04:33 - And if we can be doing, you know, five, 10, 15%
04:36 and actually attribute that to what Patch is doing,
04:39 I think that's really exciting.
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